SB 1183, SD-1

SUBJECT:  MISCELLANEOUS, INCOME, GENERAL EXCISE, Indefinitely Extend County Surcharge on State Tax, Low Income Tax Credit, GET Increase

BILL NUMBER:  SB 1183, SD-1

INTRODUCED BY:  Senate Committees on Transportation and Energy and Public Safety, Intergovernmental, and Military Affairs

EXECUTIVE SUMMARY: This bill, while nominally allowing the City & County of Honolulu to adopt the county surcharge on the general excise tax indefinitely and allowing the other counties to adopt a similar surcharge, fundamentally changes the game by enacting a statewide increase on general excise and use taxes to fund a low-income credit in the income tax system, ostensibly to make up for the regressive nature of the GET.

Lawmakers need to keep in mind that the surcharge is the County’s money.  Although the State provided the vehicle, the County had to, and did, adopt an ordinance imposing tax (to be collected through the GET system), and the tax is only imposed on county taxpayers and businesses.  Ten percent of this money is now skimmed off the top to go directly to the State general fund, and various drafts of this and related measures earmarked that money for statewide programs ranging from the homeless to state highways and bridges.  The State could perhaps keep what it takes to collect the money, but further diversion of county money to statewide programs and services obviously benefits the state at the expense of county taxpayers, which raises serious constitutional questions.

Even the bill as originally introduced presents many policy issues, including the scope of what the tax is supposed to cover.  Policymakers need to decide exactly what it is they are funding, and the extent to which they are willing to write the counties a blank check.  If it is to fund operational and maintenance costs, which would be the only rationale that would justify a perpetual extension, the statute needs to be amended to permit this, and taxpayers may well conclude that they have been lied to when the tax was adopted.  The current draft throws numerous other issues into the mix, including roads in limbo, ownership of lands on which DOE schools sit, HCDA parcels, tax relief for the poor, and a general GET increase to fund educational, transportation, affordable housing, and elderly care needs.

We suggest that the bill focus on the task at hand, namely the Honolulu rail project, and give the City & County of Honolulu (and other counties that may be thinking of doing something similar) clear guidance on the extent to which this State will permit the GET to be bent out of shape for this purpose.

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SB 1290, SD-1

SUBJECT:  TRANSIENT ACCOMMODATIONS, Distribution to Counties

BILL NUMBER:  SB 1290, SD-1

INTRODUCED BY:  Senate Committees on Economic Development, Tourism, and Technology and Public Safety, Intergovernmental, and Military Affairs

EXECUTIVE SUMMARY:  Adjusts allocation of transient accommodations tax revenues to the tourism special fund for inflation. Adjusts allocation to the counties to equal forty-five per cent of the amount of revenues remaining after all other allocations are made.

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HB 1581

SUBJECT:  MISCELLANEOUS, Mandatory Disclosure of Income Tax Returns for Candidates for U.S. President and Vice President

BILL NUMBER:  HB 1581

INTRODUCED BY:  C. LEE, BROWER, CREAGAN, JOHANSON, LOWEN, MCKELVEY, NISHIMOTO, QUINLAN, TODD, Keohokalole

EXECUTIVE SUMMARY:  Requires a candidate for President or Vice President of the United States to submit a copy of the candidate’s individual federal income tax return as a condition of appearing on the ballot in Hawaii.  Why don’t we impose the same requirement for our own public elected officials?

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SB 887, SD-1

SUBJECT:  MISCELLANEOUS, Impose enhanced 911 surcharge on prepaid phones

BILL NUMBER:  SB 887, SD-1

INTRODUCED BY:  Senate Committees on Public Safety, Intergovernmental, and Military Affairs and Commerce, Consumer Protection, and Health

EXECUTIVE SUMMARY:  Imposes an enhanced 911 surcharge on prepaid phones.  This is seen as a way to close a loophole in existing law.

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HB 1474, HD-1

SUBJECT:  REAL PROPERTY, Mandated Property Tax Classification of Lands Growing Industrial Hemp

BILL NUMBER:  HB 1474, HD-1

INTRODUCED BY:  House Committee on Agriculture

EXECUTIVE SUMMARY:  Requires that land used for cultivation of industrial hemp qualify for the minimum dedication period and least expensive classification for country real property tax purposes.

With the Hawaii Constitution having been amended to give all real property taxing power to the counties, the validity of this requirement is questionable.

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HB 728, HD-1

SUBJECT:  GENERAL EXCISE, Broaden Exemption for Interisland Transport of Agricultural Commodities

BILL NUMBER:  HB 728, HD-1

INTRODUCED BY:  House Committee on Agriculture

SYNOPSIS:  Amends HRS section 237-24.3(1), which currently exempts from the GET amounts received from the interisland transportation of agricultural commodities, to also include other producers, as defined in HRS section 237-5.

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HB 1410, HD-1

SUBJECT:  TOBACCO, TRANSIENT ACCOMMODATIONS, MOTOR VEHICLE, Repeal Emergency Medical Services Special Fund

BILL NUMBER:  HB 1410, HD-1

INTRODUCED BY:  House Committee on Health

EXECUTIVE SUMMARY:  Repeals the emergency medical services special fund and the earmarks that feed it.  Program areas previously funded by this special fund will then be funded by direct appropriations which would increase transparency and accountability.

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HB 1244, HD-1

SUBJECT:  INCOME, Modify Tax Credit for Cesspool Conversion

BILL NUMBER:  HB 1244, HD-1

INTRODUCED BY:  House Committees on Health and Energy & Environmental Protection

EXECUTIVE SUMMARY:  Amends the cesspool upgrade, conversion, or connection income tax credit to: (1) make the tax credit assignable; (2) make the tax credit refundable; (3) disallow the tax credit for taxpayers whose federal adjusted gross income exceeds certain amounts; (4) expand the criteria for cesspools that qualify for the tax credit; and (5) extend the sunset date to 12/31/2022.  Requires that all cesspools in the State be upgraded or converted to septic or aerobic treatment unit systems or connected to sewer systems.  Establishes a grant program to assist with cesspool upgrade or conversion costs.

The amendments proposed are not consistent in their policy goals.

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HB 1012, HD-1

SUBJECT:  INCOME, Disallow REIT Deduction for Dividends Paid

BILL NUMBER:  HB 1012, HD-1

INTRODUCED BY:  House Committee on Housing

EXECUTIVE SUMMARY:  This bill would suspend for 15 years the dividends paid deduction that real estate investment trusts, or REITs, now enjoy.  The numerous REITs who now own and manage Hawaii real estate would be taxed like any other corporation doing business in Hawaii.

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