Friday Night Surprise: GET Hike Back on Table
Hawaii lawmakers slid a temporary GET hike into an existing House Bill Friday night.
A Senate draft version of seeks to “increase the … general excise and use tax rates and various public service company tax rates by one percent” from Oct. 1 to Sept. 30, 2013.
The GET, the number one source of revenue for the state of Hawaii, is assessed on gross income, gross receipts, or gross proceeds of all business activities. In Honolulu, the GET is 4.5 percent. In the rest of the state, the tax is 4 percent. This year, GET collections make up 57 percent of the state’s $4.38 billion general fund.
HB 793 also would temporarily suspend GET exemptions “for certain persons and certain amounts of gross income or proceeds” between Jan. 1, 2012 and June 30, 2015 and instead “require the payment of the tax at a graduated rate.”
The bill does not explain how much the measure would generate.
To try to offset the impact of the increases, the bill proposes:
- Doubling the tax credit for household and dependent care services necessary for gainful employment;
- Doubling the income tax credit for low-income household renters;
- Doubling the refundable food/excise tax credit;
- Increasing the capital goods excise tax credit.
Earlier this week, Gov. Neil Abercrombie said he “strongly opposes” an increase in the GET because he said there are better options to raise money. Even the Senate chairman of Ways and Means said this week that a GET hike wasn’t his first option, and that lawmakers are more interested in finding solutions for sustained economic growth.
In justifying the tax increases, the bill’s introduction says:
“The purpose of this Act is to address the projected $1.2 billion revenue shortfall that the State of Hawaii faces in the biennium operating budget for fiscal years 2011-2013.
“During the 2010 regular session, the state legislature reduced government spending by over $1.2 billion in general fund budget cuts. In 2009, it reduced tax credits or imposed new taxes in the amount of over $550 million, added $115 million in federal stimulus funds, and made over $150 million worth of transfers from special funds in order to tackle the original $2.1 billion revenue shortfall.”
The bill is scheduled for a Wednesday morning before the Senate Ways and Means Committee.
The proposed Senate bill differs from the , which proposed delaying the standard income tax deduction and personal exemption increases approved during the 2009 legislative session.
