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Hawaii taxpayers are on the hook for about $600 million in new tax revenue to help pay for the state’s new two-year budget.

Lawmakers approved five key tax bills Friday night that combined with cuts to state departments, labor savings and raiding of special funds will balance the state’s budget. The budget calls for spending about $11 billion in each of the next two fiscal years.

Unlike Gov. Neil Abercrombie’s budget plan, lawmakers have shifted the bulk of the tax burden to businesses by eliminating GET exemptions for nearly two dozen business activities. The move is expected to generate about $175 million a year, or half the new revenues.

Abercrombie’s tax proposals had included tax hikes that would have hit Hawaii’s elderly population by taxing pension income and eliminating Medicare Part B reimbursements for government retirees. His plan also called for a new soda tax, increasing the alcohol tax, hiking vehicle taxes and phasing out the state income tax deduction.

Legislators killed the pension tax and Medicare bills. They also rejected the soda and alcohol tax measures. They did adopt a bill that repeals the state income tax deduction and caps itemized deductions, but only for higher income earners.

The state’s budget director, Kalbert Young, told Civil Beat last week that if any of the Legislature’s revenue estimates are off target, more cuts to government programs and services will be necessary.

Here’s a look at the five major tax measures, who they’ll hit and what the impacts could look like.

GET Exemptions for Businesses

Under , nearly two dozen businesses will see their general excise tax exemptions suspended starting July 1 through June 2013. These businesses will be subject to the 4 percent tax for the two years.

The exemptions are mostly for specific industries, including general contractors, sugarcane producers, petroleum refiners, airlines and tugboat operators.

Businesses are likely to pass on the increased costs to their customers, as evidenced by some of the opposing the bill.

For example, Hawaiian Airlines testified that it pays the state approximately $50 million a year in taxes and fees, including $5.2 million in general excise taxes this year. “Loss of these
exemptions will require further fare increases across our system and/or other remedies, such as reductions in service and workforce,” Keoni Wagner, vice president of public affairs, testified. The airline would pay additional GET under SB 754.

The Hawaii Harbors Users Group also opposed the bill, testifying, “With these additional taxes, tariffs would increase and as a result the cost of all goods purchased by consumers would increase to cover this expense. With approximately 98 percent of Hawaii’s imported goods passing through our harbors … we anticipate that this bill will result in a significant increase in cost to Hawaii’s residents and businesses.”

Bottom line: Expected to raise $173 million a year.

Income Tax Deduction, Itemized Deductions

Under , higher income earners will lose the state income tax deduction and will be limited in the amount of itemized deductions they can claim.

The changes will apply to individuals with adjusted gross incomes over $100,000, head of households who earn more than $150,000 and couples making more than $200,000.

A repeal of the deduction for state income taxes paid would essentially increase the amount of income subject to tax.

Under the current , standard deduction amounts in Hawaii are:

• Single: $2,000
• Married filing separate: $2,000
• Married filing jointly: $4,000
• Head of household: $2,920
• Qualifying widower: $4,000

Itemized deductions will be capped at the following amounts under the same income thresholds above:

• $25,000 for a taxpayer filing a single return or a married person filing separately with a federal adjusted gross income of $100,000 or more;
• $37,500 for a taxpayer filing as a head of household with a federal adjusted gross income of $150,000 or more; and
• $50,000 for a taxpayer filing a joint return or as a surviving spouse with a federal adjusted gross income of $200,000 or more.

SB 570 also delays until 2013 a planned increase in the standard deduction and personal exemption that was set to take effect this year.

Bottom line: Expected to raise $51.8 million a year.

Vehicle Registration Fees, Vehicle Weight Tax

Under , car owners will see a $20 increase in the state’s flat-rate vehicle registration fee, from $25 to $45. And would double the vehicle weight tax, which currently ranges from .75 cents ($0.0075) to 2.75 cents ($0.0275) per pound.

These two bills would add $55 to the average person’s registration bill.

Here’s a before-and-after breakdown of the charges for a car that weighs 3,500 pounds (such as the Toyota Camry), which the bill says is the average for the state:

Before:

• State vehicle weight tax ($0.0075 per pound): $26.25
• State registration fee: $25
• Honolulu county weight tax ($0.05 per pound): $175
• Honolulu registration fee: $20
  Total: $246.25

After:

• State vehicle weight tax ($0.0175 per pound): $61.25
• State registration fee: $45
• Honolulu county weight tax ($0.05 per pound): $175
• Honolulu registration fee: $20
  Total: $301.25

Bottom line: Registration fee expected to raise $20.6 million a year. Weight tax increase expected to raise $33 million a year.

Hotel-Room Tax for the Counties

Under , the state would cap the amount of Transient Accommodations Tax (TAT) revenue that is divvied up among the four counties at $85 million. (Previous versions of the bill had placed the cap at $102 million and $93 million.)

Under current law, 44.8 percent of TAT revenue is distributed to the counties. Of that amount, the counties get the following: 44.1 percent to Honolulu; 22.8 percent to Maui; 18.6 percent to Hawaii County; and 14.5 percent to Kauai. Last year, the counties shared about $90 million.

Bottom line: Expected to raise $32 million in fiscal 2012, $38 million in 2013.

Rental Car Fees

Under , those who rent cars from locations other than Hawaii airports will see a daily rental surcharge go up to $7.50 from $3. (Airport rentals already collect $7.50 in daily surcharges.)

The state would divert $4.50 of the surcharge to the state’s general fund for one year, until July 2012.

Bottom line: Expected to raise $60.8 million in fiscal 2012.