Public hearing set for general excise tax hike

  • The public will get its chance to weigh in on Bill 19 at 5:30 p.m. Tuesday at council chambers in Kona.

An increase in the county’s surcharge on the state general excise tax has been endorsed by state legislative leaders, most of the County Council and Mayor Harry Kim.

Now it’s the public’s turn to weigh in.

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The council has scheduled a public hearing on Bill 19, doubling the county GET surcharge from one-quarter to one-half cents on the dollar and extending it for 10 years until the end of 2030. The hearing is scheduled for 5:30 p.m. Tuesday at the West Hawaii Civic Center.

People can also testify by videoconference from Hilo council chambers, the Waimea and Pahoa council offices, old Kohala courthouse and the Naalehu state office building.

The tax is charged on almost everything, except for federal food assistance programs such as SNAP food stamps and the WIC program, prescription drugs and prosthetic devices. It’s estimated that tourists pick up 25 percent to 35 percent of the tax.

Under state law, the money can currently be used only for roads, mass transit and trails. Increasing the GET will bring in an anticipated $50 million annually, compared to the current $25 million annually.

Kim said raising the GET is preferable to having to continue raising property taxes, which is the county’s primary source of revenue to run government. Other options are cutting services, he said.

Council members, sitting as the Finance Committee last week, forwarded Bill 19 by an 8-1 vote.

Two council members who have been lobbying the Legislature for disaster recovery funding said legislative leaders have questioned whether the county is going to raise the GET under the temporary ability it allowed. The county will lose the opportunity if it doesn’t act by March 31.

“My time at the Legislature provided a better understanding that they are trying to encourage us to help ourselves,” Hilo Councilwoman Sue Lee Loy said Thursday.

Puna Councilwoman Ashley Kierkiewicz expressed her frustration with the process at the committee meeting last week. She and Puna Councilman Matt Kanealii-Kleinfelder questioned whether Puna, whose roads are primarily privately owned and don’t qualify for government road money, would actually benefit from the tax hike.

“I’m sure you can appreciate the pickle that I’m in,” Kierkiewicz said. “I’m having to go to the Legislature and hustle for lower Puna. … I’m in touch with House and Senate leadership and they are saying, ‘Ashley, you got to exercise some courage and raise that GET if you want some money.’ They are watching our every move but at the same time I cannot stomach raising the GET when we have people that are in Puna begging to go home.”

The only council member voting against the GET was Kohala Councilman Tim Richards, who wants to see the whole budget before he knows what should be raised. Kim is required under the county charter to submit a preliminary budget by March 1.

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“When I took office, the budget was $461 million; now it’s $518 million, a 13 percent increase,” Richards, who just started his second term, said at the time. “I’m not supportive of any tax increase if I don’t know what the budget is. … Every budget, we’re raising taxes, raising taxes and I have an issue with that.”

The county’s one-half cent GET would be in addition to the state’s 4-cent tax. The county share would add 52 cents to a $100 bag of groceries, with the county share costing $100 annually to a household spending $20,000 on eligible expenses or $250 for those spending $50,000.

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