“Tax bills suggest obliviousness to our daily struggles.”

Let’s steer clear of tax hikes, instead focus on lowering costs

By Keli'i Akina, Ph.D. President, CEO Grassroot Institute, March 2025

Hawaii taxpayers have barely had a chance to enjoy the benefits of the personal income tax cut passed unanimously by the Legislature and signed by Gov. Josh Green last year, but some lawmakers already are looking for ways to undermine it.

An unofficial tally of potential tax or fee increases under consideration during the 2025 session found at least 60 sprinkled throughout the more than 3,000 bills that were introduced, including the so-called green fee that would increase the state transient accommodations tax by almost 20% from 10.25% to 12%.

Other tax-hike measures include a new wealth asset tax and a tax on retail deliveries. 

Some legislators also proposed a massive proposed carbon tax increase, but that thankfully will not move forward because it failed to meet an administrative deadline. 

And then there’s SB1043, which is the good, the bad and the ugly of confusing tax policy all rolled up in one. 

In this bill, we find an exemption for groceries and medical services from the state general excise tax; an increase in the GET for everything else; an exemption for unemployment pay from the state income tax; a restructuring of the deductions and brackets of the state income tax; and a new “privilege tax” of an undefined amount aimed at many state businesses.

Its companion bill in the House, HB959, fortunately has been deferred, but SB1043 is still alive and Hawaii taxpayers can only hope that this will meet the same fate as its House companion.

Thankfully, not every one of the dozens of tax- or fee-hike bills introduced each year will be enacted into law. Many are introduced simply as discussion-starters. 

But this flurry of bills is still worth noting because it shows how oblivious some of our lawmakers are when it comes to the impact taxes are having on our daily struggles to cope with Hawaii’s high cost of living.

Regardless of whether a bill is well intentioned or features a mix of both positive and negative proposals, lawmakers should not be considering any measure that would ultimately make it harder for us to get by. 

There are good reasons Hawaii residents are leaving the state in droves, and the state’s high tax burden is one of them.

For sure, state lawmakers should not be trying to increase the state GET. It is well known that the GET is a regressive tax that falls most heavily on the least fortunate. 

Even an increase in the transient accommodation tax, supposedly aimed at affecting only tourists, is sure to hurt local families. 

Lawmakers should be especially wary of claims that a bill will help bring in big revenues for the state, because that’s just code for “This is a massive tax hike.” 

No, Hawaii doesn’t need new tax schemes to “generate revenue.” We need policies that will lower our cost of living, increase job and business opportunities, and put our state on a path to becoming more affordable and prosperous for all. 

Those are the kinds of legislative proposals that I would love to see.