Ilagan: I Oppose Hawaii County GE Tax Hike

Dear Editor,

As you may have read in today's newspaper ("Proposed tax hike limps along"), the Council's Finance Committee yesterday discussed, and voted to send to a public hearing, a proposed county surcharge to raise the General Excise Tax from 4 percent to 4.5 percent between 2018 and 2027. Such a surcharge would raise an estimated $20 million per year based on current projections, and according to state law, those funds can only be used for "public transportation systems."

The news article did not quote me or make my position clear on this proposed tax hike, but I want to make it clear to you that I OPPOSE Bill 165.

By way of background, the state Legislature has put us in a difficult situation by changing the formula for transient accommodation taxes -- on hotel rooms, bed and breakfast operations, and the like -- from a percentage of revenues to a capped amount that equals about $25 million per year. This was done during the Great Recession and, we were told, was supposed to be a temporary cap on County revenues. Now the economy has recovered, and hotel occupancy rates are on the rise, but the cap remains, we are told, because Hawai'i County has not exercised all of its options to raise revenue; that is, we did not enact a surcharge on the GET, as Honolulu did.

I think that is wrong. As many testifiers noted yesterday, the GET is a regressive state tax that hits hardest those who are least able to afford it. It is assessed on food, medicine, clothing, utilities -- in short, many things unrelated to "public transportation." Removing the cap on TAT revenue distribution to the counties should be the priority. I want funding for transportation in Puna, but I firmly believe it should not be through a GET surcharge.

Mahalo!

Council Member Greggor Ilagan

District 4, Puna

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