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Mayors seek ability to raise GET

January 14, 2014 - 8:59pm

Mayor Billy Kenoi says he isn’t seeking a higher general excise tax, but he’s supporting fellow mayors in asking the Legislature for the flexibility to raise it with a county surcharge.

The Hawaii Council of Mayors is asking the Legislature to allow counties to add a surcharge of up to 1 percent on the state GET, which is currently at 4 percent. Honolulu already has a half-cent GET surcharge it’s using to help pay for rail transit.

Unlike a sales tax, the GET is applied against all steps of a manufacturing process, leading to costs passed on to consumers beyond the 4 percent at the register. About one-third of it is paid by visitors, Kenoi said.

He said Hawaii County has few options to deal with increased costs other than raising property taxes of residents. Having a GET surcharge would give the county more flexibility to raise money for infrastructure such as roads, he said.

“Nobody’s proposing to raise the excise tax,” Kenoi said Tuesday. “The mayors are asking for the flexibility to raise the general excise tax rather than having to go to the Legislature every year for a greater share of the (transient accommodations tax).”

Kenoi said state lawmakers suggested counties use a GET surcharge when the Legislature started reducing the counties’ share of the TAT about four years ago. Counties had long relied on the TAT, collected primarily from tourists, as a way to defray costs associated with tourists’ wear and tear on county infrastructure and increased use of county services such as police.

Counties’ efforts to restore the TAT to former levels have so far been unsuccessful, and a package of Hawaii State Association of Counties priorities no longer includes the TAT request, after the list was whacked from 14 priority items to three. The HSAC executive committee is scheduled to consider the mayors’ request to add the GET issue to the combined county priority package at a 3 p.m. meeting today in Honolulu.

Hawaii County Councilman Dennis Onishi of Hilo, HSAC vice president, said the executive committee is able to add items to the legislative package without first getting approval from the county councils. The councils from the various counties were responsible for striking most of the proposals out of the package.

The only proposals still in the HSAC package are bills limiting liability for lifeguards, allowing governments to repair and maintain roads where jurisdiction is in dispute, the so-called “roads in limbo,” and providing $2.8 million for a rural physician training program.

Onishi said HSAC and the Council of Mayors agreed this year for the first time to present a unified package to the Legislature, which convenes its 2014 regular legislative session today.

“HSAC and HCOM are piggybacking on each other,” Onishi said.

If the GET bill prevails in the Legislature and the counties opt to impose or raise their GET surcharge, it must be done by ordinance after a public hearing. That means the County Council must create and approve a bill and the mayor must sign it or allow it to become law.

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