• Reasons for postponement of tax hike are numerous Reasons for postponement of tax hike are numerous By Lowell Kalapa The other week as the Honolulu City Council was poised to take the second of three required votes on imposing
• Reasons for postponement of tax hike are numerous
Reasons for postponement of tax hike are numerous
By Lowell Kalapa
The other week as the Honolulu City Council was poised to take the second of three required votes on imposing the additional half-percent rate on the general-excise tax for a transit system, a flurry of activity suddenly hit the council floor.
Onlookers wondered what was going on. First, the committee chair, out of whose committee the proposal was coming, was missing in action, as the council chair called for the measure. After a short diversion, the committee chair reappeared, and suddenly moved to table the proposal. When told that the motion to table was out of order, the motion was subsequently voted down, and then the committee chair moved to postpone the vote on the proposal. With the rest of the council agreeing, the vote was postponed for another month.
While some cynics opined that this was nothing more than a political move to put the vote after the deadline for the governor to go up or down on the legislative bill pending her consideration, others detected an air of reluctance on the part of some of the members of the council. In the hearing that followed, where more than 30 citizens showed up to testify on the proposal, some good reasons why the council needs to reconsider the issue were discussed.
On the transit side, the most sensitive question asked by the witnesses was about the “plan.” As they noted, taxpayers are being asked to support a tax increase when there is no plan, no detail, and no cost estimate of the transit plan for which this tax increase is supposed to pay. The next logical question was, if there is no price tag for the transit proposal, how could taxpayers be assured that “only a half-percent” hike in the general-excise tax will be sufficient to fund the proposal? As others pointed out, is the half percent merely a foot in the door that would then commit future taxpayers to an even higher increase in the tax rate?
Still others questioned why the tax increase was being approved when there was no assurance whatever the transit system proposed would indeed solve the traffic gridlock on O‘ahu. One witness pointed out that the single linear train that has been suggested is doomed to failure because it lacks the ability to deliver people to a variety of destinations much like the BART line in San Francisco and Oakland has failed to do. She noted that traffic continues to grow in the Bay Area, and people refuse to give up their cars.
Others noted that the “successful” transit systems that supporters point to are really a grid of lines crisscrossing the urban area of the respective cities like Hong Kong or Washington, D.C. which, as one observer noted, was paid for by all taxpayers, being nearly fully funded by the federal government. And, as another observer added, continues to run in the red.
On the issue of the tax itself, witnesses noted that earlier that morning the council had approved a slew of increased taxes and fees ranging from hikes in real-property-tax bills by not lowering rates to compensate for the dramatic increase in valuations, to a penny-per-pound increase in the vehicle-weight tax. In the latter case, for the typical compact car, that will mean about another $33 per year to register that vehicle, and even more for larger vehicles like SUVs.
The basic sewer fee will go up as well, rising over the next few years until the fee is doubled by the year 2010, when it will reach more than $100 every two months for the typical single-family-residential user. That’s not counting the usage charge based on the amount of water consumed, which will also rise. Even the sewer-connection charge for a new home will rise, although council members were quick to point out that the increased connection charge won’t apply to “affordable homes.”
One witness questioned the rush to enact the tax increase. Observing that it appears that the speed to adopt the increase was to insure that Honolulu got in line to apply for federal funding, he questioned why the city couldn’t wait until the next round of funding in six years. By then, hopefully, some serious planning and some good community discussions would have taken place, and there might be a better buy-in by the community and, more importantly, by the taxpayer.
It would seem this is truly putting the cart before the horse or, as another witness noted, “like buying a pig in a poke.” Indeed, raising a tax that has such a broad impact on the economy without good reasons and a solid buy-in by the taxpayer does nothing more than raise the cynicism of the political process.
- Lowell Kalapa is president of the Tax Foundation of Hawaii.
