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Businesses, Owners Brace For Vehicle Tax Hike

Companies Face Downsizing Vehicle Fleets

POSTED: 6:08 am HST June 12, 2009

Honolulu businesses are struggling in this economy and some said the city government is about to make things even tougher by hiking the vehicle weight tax 67 percent.

The vehicle weight tax will go up 2 cents a pound in the next 18 months. The tax rate for most personal vehicles will go up twice in January and again in January 2011.

While that may not sound like much, it ads up to a heavy burden when you are talking about a 5-ton commercial truck or a 5,000 pound sport utility vehicle.

For truck owner Shane Kapea, that means he will pay $100 more in weight taxes. He said the increase will be a hardship.

"The unemployment rates are up and there's a lot of people in Hawaii. We love our trucks, we love our big cars because a lot of us have big families," Kapea said.

Supporters of the increase said it is needed to keep up with road repairs, subsidize the bus system and reduce the burden on property taxpayers.

The increase will hit many small businesses hard. Business like Waialae Plumbing and Construction, which has 20 trucks each weighing between 6,000 and 10,000 pounds, fear what to do next.

"I may downsize a vehicle or two that we might have kept before we might not be able to keep now," owner John Emery said.

That is because the thousands in additional vehicle taxes can't simply be added to his prices.

"You won't have any business if you pass it on," Emery said.

The good news for small business is that the commercial property tax rate is not going up. That happened last year.

Advocates for business complained to the council that maybe government should get smaller.

"Everyone is cutting costs and making do with less and we feel that government should do the same," said Gareth Sakakida, of the Hawaii Transportation Association.

Waialae Plumbing has cut back seven employees down to 25. The vehicle tax increase will now cut into the bottom line,

"We can't exactly pass that on in a bad economy so it really just affects us," Emery said.

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