Lawsuit Challenges 10% Skimmed by State from Honolulu Rail Surcharge
News Release from Tax Foundation of Hawaii
HONOLULU, HAWAII–October 21, 2015–The Tax Foundation of Hawaii, a nonprofit taxpayer watchdog organization, has filed suit against the State of Hawaii to halt the State’s practice of skimming tens of millions of dollars each year from the amounts collected for the Oahu rail surcharge. The lawsuit alleges that although the law authorizing the diversion allows the State to retain the costs of administering the surcharge, the amount actually taken is many times those costs, amounting to a hidden State tax unwittingly paid by Oahu residents and businesses.
According to Tom Yamachika, President of the Tax Foundation of Hawaii: “Although public opinion on the rail project is divided, this lawsuit is not about whether the rail project is good or bad. We on Oahu pay an extra 0.5% surcharge on most of the things we buy, and think that the money is going to rail. In fact, over $160 million to date has been kept in the State general fund, and is spent on everything but rail. The law says that this money is supposed to pay for the costs of administering and collecting the tax, but not a penny of it was ever designated or set aside for either of the departments involved, and the total amount grossly exceeded those costs. We know this because in multiple years, the amount of the diversion was comparable to, or exceeded, the entire budget of the Department of Taxation.
“You may remember that in this past legislative session, the City & County of Honolulu was begging for an extension of the surcharge because it wasn’t getting the money it needed, and it ultimately received approval for a five year extension. If this diversion is not stopped, we will be seeing more and longer requests for extension, to the detriment of taxpayers.”
* * * * *
Grassroot Stands with Tax Foundation in Lawsuit Over Rail Surcharge
Watchdog Group Criticizes Lack of Transparency, Diversion of Taxpayer Funds
News Release from Grassroot Institute
HONOLULU, HAWAII--Oct. 21, 2015--Today, the Grassroot Institute of Hawaii expressed support for the lawsuit filed to stop the state's diversion of funds collected for the Oahu rail surcharge. The suit, which was filed by the Tax Foundation of Hawaii takes aim at the 10% of funds taken by the state for "administrative" costs that are unclear and in excess of the actual expense of collecting and administering the tax.
"This is yet another example of the State's lack of transparency when it comes to the rail surcharge," stated Keli'i Akina, Ph.D., President of the Grassroot Institute. "As the Tax Foundation points out in their lawsuit, the State has kept more than $160 million collected by the Oahu rail surcharge and added it to the general fund--to be spent on whatever they wish, with no accountability."
Dr. Akina continued, "In the 2015 legislative session, the citizens of this state were told that we would need to continue this surcharge in order to complete the rail project. At the time, the Grassroot Institute advocated for a better accounting of the costs and spending on the rail project. The fact that the state has been skimming an amount from this surcharge that exceeds the entire budget of the Department of Taxation only emphasizes the need for an audit of the state systems involved and the project itself. The people of Hawaii have been sold a bill of goods on the rail project, and this suit is a necessary step in ensuring clean, responsible, and accountable government."
---30---
SA: Lawsuit disputes state’s handling of rail tax fee
HNN: Tax Foundation files lawsuit against state for skimming rail tax
KHON: Watchdog group files lawsuit over state’s ‘administrative’ take on rail tax