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.
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 One of the withdrawn measures would have postponed the bill until Aug. 22, after the primary election.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.
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.