Hawaii residents can expect higher taxes and fees as early as this summer under several financial bills that have survived the halfway point of the Hawaii Legislature.
While some money bills have died and others have been significantly altered, a host of tax increases are expected to become law to help the state address a projected $900 million shortfall over the next two years.
Still in play are proposals that would tax pension income, increase the state’s alcohol tax, hike the vehicle weight tax, and temporarily cap itemized deductions on income tax returns, among others. The only direct tax increase that lawmakers appear to have completely nixed is the plan to impose a soda tax on sugary beverages.
Lawmakers have altered many of Gov. Neil Abercrombie‘s revenue-generating measures to bring in significantly less money than the governor had hoped to gain.
Alcohol Tax
The Bill:
What it Does: Increases each of the six alcohol taxes by 20 percent.
A Senate version, , which also is still alive, had initially proposed raising the tax by 50 percent, but the dollar amounts in the latest version have been removed.
Cigarette Tax
The Bill:
What it Does: Expands the cigarette tax to include more tobacco products, including large cigars and smokeless tobacco products.
Vehicle Registration Taxes
The Bill: and
What it Does: HB 1101 would hike the state’s flat-rate vehicle registration fee from $25 to $45. HB 1102 would increase the vehicle weight tax, an annual tax that all Hawaii car owners pay:
- from .75 cents to 1.75 cents per pound for cars up to 4,000 pounds
- from 1 cent to 2 cents per pound for cars between 4,001 and 7,000 pounds
- from 1.25 cents to 2.25 cents per pound for cars between 7,001 pounds and 10,000 pounds
- from a flat fee of $150 to $300 for vehicles over 10,000 pounds
Pension Tax, Itemized Deductions
The Bill:
What it Does: Imposes the state income tax on pensions of single and married taxpayers filing separately with federal adjusted gross income of $100,000 a year, heads of households and surviving spouses who earn $150,000, and couples that make $200,000. It also repeals the state income tax deduction using the same income thresholds. Single filers with federal adjusted gross income of $100,000 a year, heads of households and surviving spouses making $150,000, and couples that make $200,000 would lose the deduction.
The thresholds are much lower than those proposed by Abercrombie and would bring in a lot less revenue.
Transient Accommodations Tax
The Bill:
What it Does: Temporarily increases the transient accommodations tax rate on time share units by 2 percentage points to 9.25 percent though June 30, 2015.
Business Exemptions
The Bill:
What it Does: Temporarily suspends GET exemptions for certain activities through June 30, 2015, and requires the payment of the tax at a graduated rate.
According to the latest version of the bill, previously exempt activities that would be subject to tax, include:
- Tugboat and towage services
- Labor organizations for real property leases
- High technology development grants
- Sugarcane producers
- Petroleum product refiners
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