Tracking Tax Hike Bills: And Then There Were Two

Hawai'i Free Press

Sunday, April 30, 2017

Tracking Tax Hike Bills: And Then There Were Two
By Andrew Walden @ 12:17 PM :: 21616 Views :: Taxes

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by Andrew Walden UPDATED April 30, 2017

Hawaii legislators are holding final votes two tax hike bills. These include a TAT tax hike for Rail (SB1183) and a massive Income Tax hike on small business owners (HB209) which has been spuriously justified by a much smaller income tax credit for low earners. The proposed Hawaii Obamacare Tax has morphed into a study on how to raise taxes next year. A fourth bill has already passed both houses and has been signed into law by Gov Ige. These four and a fifth bill which allows car rental companies to pass more taxes on to consumers are highlighted IN YELLOW. Several other tax hike bills died in Conference Committee last week.

Here is a complete list of tax bills which got traction in this legislative cycle with links to the bill page on the Legislative website.

Tax Cuts:

HB670 HD1 “Creates the Hawaii Working Family Tax Credit, a refundable credit capped at 10 percent of the federal earned income tax credit. (HB670 HD1)”-- No Motion Since March 9

HB932 HD1 “Gradually increases the credit amounts and amends the income brackets of the refundable food/excise tax credit. Repeals the sunset date of Act 223, SLH 2015, which amended the food/excise tax credit. (HB932 HD1)”-- No Motion Since March 9

SB871 “Amends the excise tax rate on large cigars.”-- No Motion Since Feb 22

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TAX HIKES

Rail GE Tax Hike, GE Tax 'Skim':

SB1183 SD2 “Repeals the requirement that 10% of revenues from the county surcharge on state tax be withheld to reimburse the State for administrative costs. Sunsets if an ordinance that allows the capital costs of a rapid transportation system to be paid from county funds is not enacted before December 31, 2017. Requires the mayor of the county to submit certain plans with respect to the rapid transportation system. (SD2)” -- (UPDATE March 22, 2017: SB1183 Rail GE Tax language has been reinstated by House Transportation Committee--UPDATE April 9, 2017: Referred to WAM which reduced skim to 1% and extended GE Tax override two years--a $792M tax hike.--UPDATE April 11 House vote to approve 41-10. April 13, Senate disagrees with House amendments. Next stop Conference Committee.

UPDATE: SB1183 SD2 HD2 CD1 becomes a Massive TAT hike for Oahu rail and '$50M shall be allocated to the new start education special fund,' and the DoTax skim is reduced to 1%. Scheduled for House and Senate votes Tues May 2.

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HSTA Slush Fund State Property Tax:

SB683 SD2 “Proposes amendments to the Constitution of the State of Hawaii to advance the State's goal of providing a public education for the children of Hawaii by authorizing the legislature to establish, as provided by law, a surcharge on residential investment property and visitor accommodations. (SD2)” UPDATE April 11 House vote 49-0 with two excused to approve. April 13: Senate disagrees with House amendments. Next Stop Conference Committee.--UPDATE April 21, 2017: HSTA’s $500M Property Tax Slush Fund Killed

SB686 SD2 “Establishes an education surcharge on residential investment properties and visitor accommodations for the purpose of funding public education. Effective July 1, 2050. (SD2)”--UPDATE April 11 House vote 49-2 to approve McDermott and Tupola vote 'No'. April 13: Senate disagrees with House amendments. Next Stop Conference Committee.--UPDATE April 21, 2017: HSTA’s $500M Property Tax Slush Fund Killed

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Income Tax Hike:

(NOTE: Unlike these bills, HB670 HD1 and HB932 HD1—listed above--reduce taxes on the poor without hiking income taxes on small business owners.)

HB209 HD1 “Expands the low-income household renters income tax credit based on adjusted gross income and filing status. Establishes a state earned income tax credit. Restores the income tax rates for high income brackets that were repealed on 12/31/15. Removes the sunset date for the refundable food/excise tax credit. (HB209 HD1)”--Passed 3rd Reading in Senate with Amendments April 7. House disagrees with Senate amendments April 11. Next stop conference committee. -- Conference Committee approves amended bill -- scheduled for House and Senate votes Tues May 2. HB209 HD1 SD1 CD1 will restore Hawaii's highest-in-the-nation Income Tax rates while providing far smaller benefits to low income taxpayers.

SB648 SD1 “Establishes a state earned income tax credit. Changes income tax rates after 12/31/16. Repeals the sunset date for amendments made to the refundable food/excise tax credit by Act 223, SLH 2015. Appropriates funds to DOTAX for certain tax preparation assistance outreach programs. Effective 8/30/2050. Applies to taxable years beginning after 12/31/2049. Appropriation effective 7/1/2050. (SD1)”-- No Motion Since March 9

HB690 HD1 “Decreases income tax rates by approximately 25 percent for all but the top income earners. Reinstates higher income tax brackets and rates similar to those that were repealed on 12/31/2015. (HB690 HD1)”-- No Motion Since March 9

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TAT on TVRs:

HB1471 HD3 “Requires large transient accommodations brokers and permits all other transient accommodations brokers to register as tax collection agents to collect and remit general excise and transient accommodations taxes on behalf of operators and plan managers using their services. Ensures that the subject property is in compliance with applicable land use laws. Allocates $1,000,000 of TAT revenues to each county for FY 2017-2018 to comply and enforce county ordinances regulating transient vacation rentals. Creates a surcharge tax on transient accommodations brokers. Sunsets on 12/31/2022. (HB1471 HD3)”--Unanimously approved by Senate vote April 11. House disagrees with Senate amendments. Next stop conference committee.--Update April 20, 2017: Competing Airbnb Bills Set Off Lobbying Battle -- No action in Conf Ctte, bill dies for session.

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Eliminate Mortgage Interest Deduction:

HB486 HD2 “Eliminates the mortgage interest deduction for second homes under the Hawaii Income Tax Law. Specifies that the revenue gain attributable to this measure be deposited into the Rental Housing Revolving Fund. Requires the Department of Budget and Finance, in consultation with the Department of Taxation, to submit reports on the administration of this measure to the Legislature prior to the 2018, 2019, 2020, 2021, and 2022 Regular Sessions. (HB486 HD2)”-- No Motion Since March 9

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Obamacare Individual Mandate Tax:

SB403 SD2 “Ensures certain benefits under the federal Affordable Care Act are preserved under Hawaii law, including: preserving the individual health insurance mandate for taxpayers; preserving the premium tax credit for individuals and families with low or moderate income; requiring all health insurance entities, including health benefits plans under chapter 87A, HRS, to include ten essential health care benefits, plus additional contraception and breastfeeding coverage benefits; extending dependent coverage for adult children until the children turn twenty-six years of age; prohibiting health insurance entities from imposing a preexisting condition exclusion; prohibiting health insurance entities from using an individual's gender to determine premiums or contributions; and prohibiting health insurance entitles from discriminating with respect to participation against a health care provider acting within the scope of that provider's license or certification. Effective 7/1/2050. Individual mandate requirement repeals 6/30/2021. (SD2)”-- No Motion Since March 9

HB552 HD1 “Ensures that benefits of the Affordable Care Act are preserved under State law in the case of repeal of the ACA by Congress. Preserves the individual mandate, minimum essential benefit requirements, extended dependent coverage, and prohibitions on preexisting condition exclusions and gender discrimination in premiums and costs. Establishes a trust fund and procedures to reimburse insurers for unrecouped costs of providing minimal essential insurance benefits. (HB552 HD1)”--April 11 Senate votes 24-1 to approve Rivere votes 'No' April 13 House disagrees with senate amendments. Next stop conference committee.-- April 20, 2017: HB552: State Obamacare Bill to become Study? UPDATE: HB552 HD1 SD2 CD1 becomes a study for future tax hikes--"Establishes the Affordable Health Insurance Working Group to plan for and mitigate adverse effects of the potential repeal of the federal Affordable Care Act by Congress."

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REIT Tax:

HB1012 HD2 “Temporarily disallows the deduction for dividends paid by real estate investment trusts for a period of 15 years, but with an exception for dividends generated from trust-owned housing that is affordable to households with incomes at or below 140 per cent of the median family income. (HB1012 HD2)”-- No Motion Since March 9

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Cell Phone Tax:

SB887 SD2 HD1 “Establishes a prepaid wireless E911 surcharge of 1.5 per cent of prepaid wireless service purchased at the point of sale. Allows sellers to deduct and retain 3 per cent of the surcharges collected to offset administrative expenses, but requires sellers to remit the balance of surcharges collected to the Enhanced 911 fund on a specified periodic basis. (SB887 HD1)”--Passed CPC March 24

HB206 HD2 “Establishes a prepaid wireless E911 surcharge at the point of sale. Allows sellers to deduct and retain for administrative purposes 1.5% of the surcharge that is collected. Requires deposit of surcharge balance in the enhanced 911 fund. Requires a report. Sunsets on June 30, 2022. (HB206 HD2)”--April 11 Senate approves unanimously. April 13 House disagrees with Senate amendments. Next stop conference committee.--No action, dies.

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Keeping Excess Funds Away from Taxpayers:

SB103 SD2 “Implements the state constitutional amendment of Senate Bill No. 2554 of the Regular Session of 2016 that authorizes the disposition of excess general fund revenues to pre-pay general obligation bond debt service or pension or other post-employment benefit liabilities. Takes effect 6/30/2017. (SD2)”--Enrolled to Governor April 7--Signed into law as Act 006 April 26, 2017.

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Vehicle Taxes and Fees and Fuel Taxes:

HB1587 HD1 “Replaces the state vehicle weight tax with a tax based on the assessed value of a vehicle. (HB1587 HD1)” Passed CPC, referred to WAM March 23

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Internet GE Tax:

SB620 SD2 “General Excise Tax; Businesses Without Physical Presence in the State--Amends the definition of "business" in the State's general excise tax law. (SD2)” --April 11 House votes 44-7 to approve. April 13 Senate disagrees with House amendments. Next stop conference committee.--Dies in Committee.

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Marijuana Tax:

HB263 HD2 “Amends provisions related to licensed medical marijuana dispensaries by imposing GET on a percentage of dispensaries gross proceeds or gross income and allocating a portion of GET revenues received from dispensaries to the Medical Marijuana Registry and Regulation Special Fund. (HB263 HD2)” -- No Motion Since March 9

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Not Quite a Tax Hike:

SB704 SD2 “Establishes an online vacation rental working group to develop effective data collection methods that can assist state and county governments in monitoring the impact that short-term vacation rentals have on tax collections, housing stock, and the State's brand as a vacation destination; address compliance and enforcement challenges; and create effective proposals to ensure certain housing remains in long-term rental or eligible rental use for a mandatory time period. Appropriates funds for the working group to perform its duties. Effective 7/1/2050. (SD2)” --April 11 House votes to approve 44-7. April 13 Senate disagrees with House amendments. Next stop conference committee.--Dies in Committee.

SB657 SD2 “Amends the prorated amount of vehicle license and registration fee and weight taxes that rental car companies may pass on to lessees. Requires the motor vehicle rental industry to report to the legislature prior to the regular session of 2019 and defines vehicle license recovery fee for purposes of the report. Effective 3/1/2050. (SD2)” -- No Motion Since March 9

HB735 HD2 “Allows lessors of rental motor vehicles to pass on to lessees a government assessed fee. Defines government assessed vehicle fee and vehicle license recovery fee. Requires a report by the Department of Business, Economic Development, and Tourism. Sunsets on June 30, 2018. (HB735 HD2)” --April 11 Senate votes unanimously to approve. April 13 House disagrees with Senate amendments. Next stop conference committee. --Amended bill approved in Conf Cttee, set for House and Senate votes Tues May 2.

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Formerly Included a Tax Hike:

HB574 HD2 “Provides that royalties from state land leases for basalt cinder and trap rock manufacturers shall be paid into the Basalt Materials Research Account within the Pacific International Space Center for Exploration Systems Special Fund. Sunsets December 31, 2030. (HB574 HD2)”-- No Motion Since March 9