Supreme Court of Hawaii to Hear Rail Skim Lawsuit on July 6, 2017

News Release from Tax Foundation of Hawaii

HONOLULU, HAWAII—May 31, 2017—The Supreme Court of Hawaii will hear oral argument in the case of Tax Foundation of Hawaii v. State of Hawaii on Thursday, July 6, 2017, at 11:15 AM at the Supreme Court Courtroom, Ali’iolani Hale, 417 South King Street, Honolulu, HI 96813. 

The Foundation filed suit to halt the State’s practice of skimming 10% of the gross amounts collected for the Honolulu rail surcharge.  It 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 of $25 million a year unwittingly paid by Oahu residents and businesses.  

The First Circuit Court, which initially considered the suit, dismissed the Foundation’s complaint and the Foundation appealed.  

“This year, both the House and Senate advanced bills that would have reduced the skim prospectively to 1% from 10%,” said Tom Yamachika, President of the Tax Foundation of Hawaii.  “It seems that lawmakers realized that they were diverting far too much money.  Unfortunately, unless both sides can agree on a bill without delay, taxpayers in Honolulu will continue to be cheated because of the 10% skim.  We will press forward in our efforts to demonstrate that the skim unconstitutionally burdens hard-working taxpayers and businesses in the City and County of Honolulu.”

The Foundation is represented by Paul Alston, of Alston Hunt Floyd & Ing, which is now affiliated with Dentons.  Mr. Alston said, "We are very pleased that the Court accepted this case for direct review and scheduled oral argument so quickly.  This is a matter of great importance, especially since the legislature has taken no action, despite recognizing the unfairness of taking such a large portion of the surcharge."

At the upcoming oral argument, Supreme Court justices typically will have tough questions for both sides.  A written decision will be issued after the oral argument.

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About the Tax Foundation of Hawaii: The Tax Foundation of Hawaii, a private nonprofit, nonpartisan, educational organization has, for the past 60 years, encouraged efficiency and economy in government and has promoted an equitable tax system that encourages and maintains economic growth and stability in Hawaii. Read more about us at tfhawaii.org.