State Legislature is Increasing Taxes!

Dear Businesses and Members: I am forwarding main Chamber's email alert for your action.

"Hello all, Just wanted to give you a heads up on two tax-related bills scheduled for hearing on Thursday at 3 p.m. in the House Finance Committee. HB 1742 is a bill that will repeal certain general excise and use tax excise exemptions and exclusions. It also reduces the tax rate on sales to the final consumer from 4% to 3.5%. The bill would impose GET on wages, which are currently exempt. This would be imposed on gross wages, without any offset for deductions. It would therefore amount to the equivalent of a huge income tax increase.

My guess is that the tax burden of the imposition of GET on wages would be greater than the benefit of a reduced rate on retail purchases. Moreover, this increased tax burden would fall entirely on Hawaii residents, while visitors would just enjoy the benefit of the lower GET on retail purchases. Many of our organizations as well will be affected because this bill will remove the GET exemption from non-profit organizations.

Additionally, the bill eliminates the exemptions for non-profit hospitals, cemeteries, sale of prescription drugs and many other exemptions. Real property sales and sales of stocks and other securities which are now exempt, would become taxable for any business entity or individual engaged in a trade or business.

Finally this bill will impose the GET on export sales. HB 1548 is an omnibus tax bill to provide tax equity and stimulate the economy by increasing general excise tax rates, reducing the income tax rate and establishing a hotel and renovation tax credit. This bill increases the GE Tax by ½ %. We will not support the bill, however we will note that if it passes, then we will provide input as to what would be workable and fair.

I do not have a sample testimony to provide you as I am currently working on it, but if you can, please submit testimony regardless if it's a short letter. Here is a link to the hearing notice for HB 1742: http://capitol.hawaii.gov/session2009/hearingnotices/HEARING_FIN_02-26-09_6_.HTM and HB 1548: http://capitol.hawaii.gov/session2009/hearingnotices/HEARING_FIN_02-26-09_4_.HTM.

Thanks.
Sherry R. Menor-McNamara
Vice President, Business Advocacy & Gov't. Affairs
1132 Bishop Street, Suite 402
Honolulu, Hawaii 96813
Ph. 808-545-4300 x 394
www.cochawaii.org
Fax 808-545-4369
smenor@cochawaii.org

The Voice of Business in Hawaii