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City Council Approves General Excise Tax Hike

Tax Increase Designed To Fund Rail Transit System

POSTED: 1:12 pm HST August 10, 2005
UPDATED: 6:22 pm HST August 10, 2005

The Honolulu City Council voted Wednesday to hike the general excise tax hike 0.5 percent to help pay for a rail transit system for Oahu.

Council members voted 7-2 in favor of the tax increase from 4 percent to 4.5 percent. Council members Charles Djou and Barbara Marshall voted against the measure.

Supporters of the tax hike for a rail system lined the building, packing the room inside. There were signs for and against rail.

More than 80 people signed up to testify, including one of rails staunchest supporters.

"This is for the working blue collar and white collar middle class in this state in order to have the transportation that they deserve," U.S. Rep. Neil Abercrombie said.

Mathematically, the hike turns out to be a 12.5 percent increase. That could mean up to $450 more in taxes a year for each family.

"The public has asked us to come up with a plan before we start asking them to pay for it," Marshall said.

Honolulu Mayor Mufi Hannemann supports the measure. The mayor said he will sign the authorization for the tax hike into law Monday.

The mayor and lawmakers had to negotiate with Gov. Linda Lingle to have her sign the bill that would give counties the power to raise the GET by 0.5 percent. She had threatened to veto the measure.

Lingle's concerns centered on how a one-half percentage point surcharge on the state's general excise tax would be collected. She wanted the counties, not the state, to be the ones that collect the tax.

Lawmakers promised the governor that they would introduce a bill during next year's session that will satisfy the governor's concerns over the bill.

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