It’s not easy raising taxes, the County Council Finance Committee discovered Tuesday.
The committee’s attempt to raise the general excise tax by one-half percent starting in 2018 met with a public resistance, with many people telling the county it needed to better manage the money it already gets.
The committee ultimately agreed to send the measure, Bill 165, to an April 19 public hearing in Kona before it goes to the Council for an official vote. The committee voted 6-0, with Hamakua Councilwoman Valerie Poindexter, Hilo Councilman Aaron Chung and South Kona/Ka‘u Councilwoman Maile David absent.
The added tax must be used for transportation projects, under the authority the state Legislature and Gov. David Ige gave the counties last year. The County Council must host a public hearing before passing the tax surcharge and must have a bill passed and signed by the mayor before July 1, or the ability to enact the tax expires.
Hilo Councilman Dennis “Fresh” Onishi, the bill’s sponsor, said he hoped the public outcry will carry over to the state Legislature, which has in recent years limited the county’s share of the transient accommodations tax on hotel stays and short-term rentals.
“They’re looking at us to do their work,” Onishi said about the Legislature. “They pass on the buck to the county level.”
The TAT, now limited to $18 million annually, is the county’s second-highest revenue source behind property taxes. The county would have gotten about $30 million under the old formula that was “temporarily” changed during the recession.
“We’ve got to go beg for our own money,” said Puna Councilman Dan Paleka, “and that’s wrong.”
The GET surcharge would bring in about $25 million more annually.
Residents from all over the island made their views clear — raising the general excise tax is a bad idea. About a dozen came to speak in person or submitted written testimony, all in opposition.
Bill Bugby of North Kona called the excise tax “a hidden tax, a very pervasive tax,” that’s added into all stages of the supply chain.
“Really, in many ways, it’s immoral” because it’s applied against food and medicine, he said.
Dick Matsumoto, testifying from Waimea, said, “You don’t run things efficiently and when you need money, you raise taxes and the people suffer.”
“The only good thing about this bill is it’s coming in an election year when the public will know which elected official wants to dip into their pocket,” added Steve Lopez, testifying from Kona.
Mark Gordon of Waikoloa said, “county government should investigate ways it can become more effective and utilize the funds it has. … This increased tax would impact all Hawaii County people, especially hard hitting to those lower income families.”
Albert Nakaji of Papaikou noted residents pay each step of the way with general excise taxes.
“There will never be an excess of money because government will always spend it when it becomes available,” Nakaji said. “Tax increases should always be viewed as the very last resort in government operations. … Not until every last improvement in efficiency, cost control and management has been exhausted should it ever be considered.”
“Any increase in the general excise tax is an increase to our cost of living as well as our cost of doing business,” said Joy Dillon, in Hilo, reading a letter from the Hawaii Island Realtors.
“When we consider all the goods and services that go into building a house, the price of those goods and services and the added tax that the consumer will end up paying should the GE rate increase, it will be in the thousands, not just a few cents,” Dillon said. “The impact to affordable housing in Hawaii County should be top of mind when considering these measures.”
“When will the state and counties finally realize that they can’t keep increasing taxes?” said Kailua-Kona resident John Boeggeman. “We live in the highest cost of living state in the nation and I find it quite unbelievable that raising any kind of tax is even being discussed. You were not elected to increase our taxes. Find other ways. … Raising taxes is the easy way out.”
Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.
