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Hawaii Lawmakers Consider New Sales Tax

Counties Would Have Right To Raise 1 Percent On Sales

POSTED: 6:23 pm HST April 3, 2009
UPDATED: 7:45 pm HST April 3, 2009

Sen. Donna Kim is proposing to give the counties the option to raise a brand new sales tax. That would be on top of the existing 4.5 percent excise tax paid by Oahu residents and 4 percent by neighbor islanders.

Kim said she thinks the counties should have the right to raise their own sales tax up to 1 percent.

Residents would pay the proposed new tax each time they bought something if the counties want to impose it.

"Up to a one percent sales tax for the counties that would be only on tangible personal goods. It wouldn't have the pyramid effect and wouldn't be like the (general excise) where it compounds and is regressive," Kim said.

Kim said a sales tax would give counties needed money when lawmakers are considering raiding the counties' share of the hotel room tax.

Some critics said there are enough taxes already.

"We are already looking at increased motor vehicle taxes, weight taxes, fuel taxes and real property taxes -- wrong thing to do at this time at any time," Sen. Sam Slom said.

The governor is already very firm on the record that she will oppose any bill that puts more taxes on Hawaii residents.

Residents are not happy about the possibility of a new sales tax.

"I think another tax like that, although I can understand what they are grasping for, the fact is, it is just going to be another negative to get in peoples' heads moving forward in terms of business and commerce and everything else," business owner Tim Deegan said.

"I don't think I would be for that. (4.5 percent) is already enough. I think we are being taxed to death here inn Hawaii," insurance executive Sherry Abille said.

Honolulu Mayor Mufi Hannemann said the Legislature is passing the buck.

"If the Legislature wants to raise the tax they should just do it themselves and raise it," Hannemann said. "Don't give it to the counties and make us the bad guys for raising the tax."

The counties would also have to pay their more of their own money to administer and collect the new tax.

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