THE SENATE HAS TAKEN A BILL MEANT TO REPEAL TAX EXEMPTIONS- HB2877.  AND TURNED IT INTO A 1-PERCENTAGE POINT GENERAL EXCISE TAX INCREASE.

RELATED: Overtaxed Hawaii: Protest against GE Tax hike March 23

This will increase GE Taxes on Oahu from 4.5% to 5.5% – a 22% increase.  On outer islands the bill will hike taxes from 4% to 5% -- a 25% increase.

Because the GE Tax is levied at full rate on wholesale fuels and utility bills (except for interisland airline fuels), the GE Tax multiplies throughout the economy.  5.5% tax on the fuel used to generate electricity, 5.5% on the electricity itself, 5.5% on the fuel used to transport products, and another 5.5% on the products as they are purchased by consumers is a key reason for Hawaii’s high cot of living.

The GE Tax is a primary reason for the weakness of Hawaii agriculture and manufacturing.  It is a severe impediment to tourism, giving Hawaii a reputation as an expensive place to visit. 

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ADV: 1 percentage point increase in GET backed by Hawaii Senate committees

SB: State Senate panels pass increase in general excise tax  (Hanabusa says she doubts Senate has the votes to overcome a veto from Lingle.)

HB2877 >>> Bill Status and text (note: testimony refers to previous version of bill, not to broad-based GE Tax hike passed by Senate committees)

TAX INCREASE ADVANCES IN STATE SENATE 3/15/2010.