Legislature bows to public union pressure

Surprise! While private sector workers continue to take major hits, government employees can be secure in knowing they will not have to sacrifice. We’ll all pay for it. Here’s a piece from the Hawaii Reporter:

http://www.HawaiiReporter.com

Breaking News: Hawaii State Legislature Plans New General Excise Tax Hike

This is in addition to tax hikes on income tax, hotel room tax, fuel tax, conveyance tax, motor vehicle weight tax, cigarette and tobacco tax, and other fees and charges; ACT 221 Technology Tax Credit Law also in jeopardy

By Hawaii Reporter, 5/1/2009 12:16:24 PM

To protect the jobs and benefits of government workers from the budget shortfall, Hawaii lawmakers are bowing to the pressure of government worker unions, and resurrecting a proposal to increase the state’s General Excise Tax.

HB 1404, which was gutted and replaced with new language, emerged this morning with an increase in the state’s most regressive General Excise Growth Income Tax in an unspecified amount thought to be between one half and one percent on top of the current 4 percent (4.5 percent on Oahu).

The bill will be voted on in conference committee without the benefit of a public hearing or public input. If agreed to today, the bill will be on the Tuesday agenda for final vote in the House and Senate.

Hawaii is the only state in the union with a General Excise Tax, not a sales tax, which pyramids its rate on all goods and services. If Hawaii shifted to a sales tax, at the current rate, sales tax would be at about 16 percent.

In other tax and budget news:

* The operating executive budget is likely to be agreed to tonight prior to midnight.

* An earlier proposal to allow the counties to impose a new sales tax on top of the GET tax, in response to the state taking the revenues from the counties hotel room tax, was rebuffed by all four county mayors and died in conference committee yesterday.

* The GET tax hike is one of several tax hikes being approved including the income tax, hotel room tax, fuel tax, conveyance tax, motor vehicle weight tax, cigarette and tobacco tax, and other fees and charges.

* It is expected that the counties will also raise property taxes, which are used for law enforcement, general administration, safety and maintenance. County taxes do not fund education as they do in other states.

* SB 199, which alters the Act 221 technology investment tax credit program, passed out of conference committee yesterday with a ‘NO’ vote by Senator Carol Fukunaga, D-Makiki, and strong reservations by Rep. Gene Ward, R-Hawaii Kai. The technology community is extremely upset with the measure, which they say would cripple new and burgeoning investment in Hawaii’s businesses. Many small businesses would be impacted most. That bill goes to a vote on Tuesday, however there is some backdoor maneuvering because the majority party, which controls more than 90 percent of the legislature, does not want to be portrayed as anti technology and anti small business.

* Gov. Linda Lingle has said she will veto any new major tax increases, however, Democrats can override her vetoes with a two-thirds vote in both Houses.

The legislative session ends May 8 after a 2-day extension authorized last night.

For more information, or to reach Hawaii lawmakers about these proposals, log onto http://www.capitol.hawaii.gov/

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