What’s Dead – For Now

by Tom Yamachika, President, Tax Foundation Hawaii

We are at the point in our legislative session where House-Senate conference committees are hashing out the final versions of bills that, if passed by both chambers, would be sent up to the Governor’s office for possible signing into law.  The conference committee process is opaque.  Public testimony is not allowed, and the conferees meet in public only to announce that a deal has been reached or that they need more time to reach an agreement.  Most of the action happens in back rooms.

This week we are looking at some of the bills that fell by the wayside – although it is still possible for conference committees to resurrect them by adding them to other bills that are still alive.  We are concentrating on bills that had enough support to pass from one chamber to the other; the fact that most of these are House bills simply means that the Senate, this year, was less inclined to move ideas forward for further discussion.

There were bills that proposed new taxes.  The proposed new taxes on concert tickets to support culture and the arts (HB 2604) and on gasoline-powered vehicle sales to support rebates for certain people who buy zero-emission cars (HB 2030) are dead, as is the proposed constitutional amendment to allow the State to add a surcharge to real property taxes, supposedly to support education (HB 2147).  A proposed unrealized gains surcharge in the estate tax (HB 2148) did not receive a hearing in the Senate.

Some bills proposed to hoist tax rates.  A bill proposing to end the lower tax rates on capital gains (HB 1850) kicked the bucket, as did a proposal to increase the barrel tax on fossil fuel products to fund electric vehicle charging systems (HB 1620).  We wrote earlier about several bills that would force rental car companies to pay significantly more in Hawaii Use Tax when they bring in new cars for rental.  There were six of these bills, all based on the premise (a faulty premise, as we argued in the prior article) that rental car companies were benefiting from a tax loophole.  All six variants now sit on the cutting room floor.  And, last but not least, a bill proposed replacing the current liquor tax rates with different rates based on alcohol by volume (HB 1991), although it’s hard to say whether or to what extent rate hikes were proposed because the rates in the bill were blanked out.

Many bills proposed tax credits.  A bill proposing a credit for diaper purchases (HB 2214) was shelved, as was one suggesting a credit for automated external defibrillators in the workplace (HB 1535) and for a qualifying apprenticeship program (HB 1851).  A Senate bill proposed a credit for qualified insurers that offer one or more federally qualified health savings account eligible high deductible health plans (SB 2431).

Owner-occupants, after buying a home, might be stuck with the real property tax classification of the property seller because the sale occurs after the deadline to claim a home exemption from property tax.  A bill to force the counties to adjust the classification immediately (SB 3333) was killed in the House.  That bill may not be a solution anyway, because under our state constitution counties and not the State have exclusive jurisdiction over the real property tax.  (Tell your county council that this issue needs some attention!)

Of course, there is still a lot going on in the session.  Many tax bills are still in play, and we have been reporting about many of them.  We will share more information about the remaining bills in this space.