(BIVN) – Hawaiʻi County officials are considering another tax increase, and are taking a look at increasing the General Excise Tax surcharge that just went into effect in January.
Bill 19 was advanced by the Hawaiʻi County Council Finance Committee with a positive recommendation on Monday afternoon in Hilo. The bill would increase the one-quarter percent (0.25%) GE surcharge already collected by an additional one-quarter percent (0.25%) for a total of one-half percent (0.5%) beginning on January 1, 2020.
The bill also repeals the December 31, 2020 surcharge-termination, or sunset date, and establishes a new sunset date of December 31, 2030.
According to information provided by the administration, the new surcharge would generate an estimated $50 million per year, and by law the collected revenue must be applied to transportation-related costs.
Hawaiʻi County Mayor Harry Kim and Finance Director Deanna Sako appeared in the Hilo council chamber to present the proposed tax increase to the local lawmakers.
The additional GE tax surcharge would be an “opportunity for visitors to support local government,” Sako said, and would be chance for the county to diversify revenue sources. Without the new GE Tax, officials suggested, the County may have to consider increasing Real Property Tax rates again, or initiate fees for services, both of which will “have potentially greater impact to residents.” A reduction in county services could also be possible.
Sako said that under the new tax increase, a $100 dollar grocery bill will increase by 26 cents. Certain federal food assistance program purchases, like SNAP and WIC, are exempt from the GET increase. Prescription drugs and prosthetic devices are also exempt, the County says.
Sako pointed out that there is a lot of undecided state legislation that could affect the county GET surcharge. Some was introduced at the request of Hawaiʻi County, such as House Bills 183 and 429, which would both allow the County flexibility on up to 50% of the total proceeds received from the surcharge.
HB 1394 is a joint request from Hawaiʻi and Kauaʻi counties to allow some GET monies to be spent on infrastructure and public safety.
Kohala councilman Tim Richards was the only “no” vote.
“We don’t have any concept of what the budget might be,” Richards commented before the vote. “I’m not supportive of supporting any tax increase if I don’t know what the whole picture is,” Richards said.
Later this evening we will be posting video of statements made by other councilmembers, some of whom were conflicted by the proposal.