Council postpones general excise tax increase proposal until next year

HILO — There will be no county surcharge on the state general excise tax this year, following action Wednesday by the County Council.

The council, on a 5-4 vote after acrimonious debate, agreed to postpone the tax hike until January, at the beginning of the new council session. That means any new tax wouldn’t go into effect until Jan. 1, 2020, if the bill passes then.

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Voting no to the postponement were Councilwomen Valerie Poindexter, Karen Eoff, Maile David and Jen Ruggles, who oppose the proposed tax hike.

“I know the council is very divided on this issue,” said Puna Councilwoman Eileen O’Hara, who sought a postponement when it became clear there weren’t enough votes to pass the measure.

Just how divided council members are was made clearer when O’Hara had to withdraw two previous postponements because her colleagues couldn’t agree to the language. One of the withdrawn measures would have postponed the bill until Aug. 22, after the primary election. The other would have given the council chairwoman, who opposes the measure, authority to call it up at any time.

Kohala Councilman Tim Richards wanted the council to work on the bill a little longer.

“I’m concerned we’re kicking the can down the road and not addressing it,” Richards said.

Richards was planning a measure that would reduce property taxes in exchange for raising the GET. Since tourists pay about 25 percent of the GET, increasing it could help spread the tax burden around, he said.

Ruggles, who represents Puna, disagreed. If the county wants more money from tourists, just increase the resort/hotel property tax, she said.

“The idea is we would rather tax …. basic goods that people need for survival, hurting people who have less in exchange for helping people who have more,” Ruggles said. “Not everyone pays property taxes.”

Council action by June 30 would have put the tax into effect Jan. 1, 2019, bolstering stretched county coffers by about $25 million for the budget the council is currently working on.

Mayor Harry Kim asked the council for approval this year, saying the budget is already strained, and the current lava emergency could add more costs. The county is falling farther behind on needed police, buses and maintenance of facilities, he said.

“This gives us an opportunity to catch up on what we will not catch up on with only with property taxes,” Kim said.

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A half-cent GET surcharge would add 54 cents in tax to a $100 expenditure, according to the Finance Department. A typical Big Island resident would pay about $10 more monthly if the tax passed, according to county administrators.

Currently, all the GET collected, 4 cents on the dollar, goes to state, not county, coffers.

  1. Big ideas May 10, 2018 5:39 am

    Surcharge implies it will be removed someday…..BS….just call it a tax increase.


  2. 4whatitsworth May 10, 2018 5:50 am

    These funds from this proposed tax increase will be used in the same way as the last tax increase. More raises, benefits, and pensions to government cronies with very little to the public good. Once these funds are absorbed the politicians will again cry out that we need more funding for basic services like police, fire, education, transportation.

    It is time to work toward removing those who waste or resources and line their pockets. I thought I saw a WHT article a while back that Kanuha heard us loud and clear, no more taxes without seeing benefits on the West Side!


  3. KonaRich May 10, 2018 7:32 am

    They sure can minimize the sound of this .5 GET surcharge as only .54c @ $100. It is a big deal to the retired & low wage earners. Yes GET goes to state, but if we raise .5 for county and a down turn happens (and it will) the state will take it. Like they did TAT share.


  4. KonaDude May 10, 2018 7:33 am

    Harry and Lloyd from dumb and dumber keep popping in my head!!!


  5. KonaLife May 10, 2018 7:55 am

    Let’s take a different look at the Finance Department’s numbers. That’s $10 for every man, women and child on the island, so a family of 5, on average, would see a $600 increase in their tax bill ($10/person/month x 12 months). What could your family do with $600/year?

    Another point about the GE tax is that it is a tax on nearly every transaction (it’s not a sales tax), so your medicine, clothes, food, gym membership, accountant, yoga teacher, flower shop, taxi driver, car dealer, landscaper, etc must collect the GE tax for every transaction. In effect, a small increase in the GE tax multiplies throughout the economy. So, while everything will only see a 54 cent increase most goods and services are taxed several times as they move through the economy multiplying the true cost to residents.


  6. PUNATIC May 10, 2018 8:33 am

    The county needs to get out of the bus business….probably better handled by a private enterprise…..just a thought


  7. konablue May 10, 2018 8:46 am

    Thank you County Council members for voting to at least postpone this request by our TAX AND SPEND MAYOR. It would have been better to vote no on the tax increase but this is at least something. The County of Hawaii does not have a revenue problem it has a Government Spending Problem and this is the issue that needs to be addressed. It may be the perfect time to think about creating a new county of West Hawaii in order to better address the issues of the west side.


  8. Leilani June 21, 2018 10:53 am

    Eliminating after school activities, eliminating recycling? Isn’t the landfill at max? All makes perfect sense.


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