The 2012 Hawaii Legislative Session started on January 18 – a subdued, “working” opening day without fanfare, without entertainment, without public spectacle. That said, there are 2,754 bills introduced in the House of Representatives, and 2,509 bills introduced in the Senate (as of February 6).
Over the past few weeks, I’ve skimmed through the list of proposed bills, hoping that the measure summaries are accurate. I don’t have time to read the full text of every bill, and there seems to be a lot of duplication.
Here are the tax highlights from the 2012 Legislative Session. There are many more tax proposals, increases, decreases, and adjustments; as well as numerous tax credits, exemptions, and repeals. If I’ve missed any important tax bills, please let me know!
There are 10 new and increased taxes to watch:
1. General excise tax (GET) increase: HB460 allows counties to add a 0.5% surcharge on the general excise tax to pay for water infrastructure. HB567 proposes an increase to the GET. HB1631 raises the GET to 5% for five years. SB3063 increases the GET by 1% to fund education. I oppose any increase in the GET. It taxes every level of production, from wholesale to retail, and forces us to pay taxes on the taxes we pay. It also makes our economy seem stronger, by including taxes in business income.
2. Sugary beverages tax: HB1062, HB1188, HB1216, SB1179, SB2479, SB2480, and SB3019 tax sugary beverages (including fruit and vegetable juice, and sweetened coffee and tea). This “sin tax” would raise the cost of beverages.
3. Plastic bags tax: HB1828, HB2260, HB2365, HB2821, and SB1363 tax single-use plastic bags. Plastic bags are tremendously useful. I think that single-use plastic containers are a bigger danger to our landfills.
4. Bottles and cans surcharge: HB1120 and SB2139 establish a 5¢ surcharge on deposit beverage containers. This bill would raise the price of beverages.
5. Taxes on out-of-state sales: SB1355 creates a “nexus standard” for taxing out-of-state businesses on their business activities in Hawaii. HB1183, HB1265, and SB2226 implement the streamlined sales and use tax agreement. It is unfair and unreasonable to expect businesses to cater to every state and local tax around the country. Everything costs more in Hawaii, and a tax on Internet sales and out-of-state sales would make everything more expensive for consumers – and reduce our competitiveness around the world.
6. Digital goods tax (music, movies, books, computer software): HB2677 and SB2884 impose the GET on digital goods. We already pay the GET on electronic devices and physical disks/DVDs; this bill proposes that content itself can be taxed (but not online newspapers or blogs, YET).
7. Fuel tax increase: HB1386 raises the environmental response, energy, and food security tax. HB1531 raises the liquid fuel tax for six years. HB2094 increase the fuel tax by 2¢ per barrel. SB176 increases the barrel tax to 35¢ per barrel. SB722 increase the barrel tax. SB722 raises the barrel tax. SB1131 increases the state liquid fuel tax (as well as the state vehicle registration fee and the state vehicle weight fee). Hawaii already has the highest gas prices in the country, and 45.8¢ per gallon is spent just on taxes (as of January 2011), estimates the Tax Foundation.
8. Vehicle registration fee increase: SB1131 increases the state liquid fuel tax, the state vehicle registration fee, and the state vehicle weight fee. SB2346 increases the vehicle weight tax. I actually don’t have a problem with raising vehicle registration fees, as long as the money is used to maintain the roads.
9. Household battery tax: HB2811 proposes a 5¢ fee per package of household batteries and a 10¢ refundable deposit fee per battery. We could easily promote battery recycling through the “blue” bin, instead of a tax.
10. Carbon tax: SB3013 establishes a carbon credits program, with rules for the sale and transfer of carbon credits among public and private agencies. This bill would create new government bureaucracy, possibly duplicate federal programs, and raise the price of consumer goods and electricity
There are also 5 refreshing tax proposals for LOWER taxes and tax reform:
1. GET decrease: SB849 repeals the GET on all intermediary business transactions. This would eliminate getting taxed twice on the same product.
2. Food and medical services exemption: SB269 proposes GET exemptions for food and medical services. SB852 proposes a GET exemption for food. While I believe that the GET should be replaced with a reasonable sales tax on retail-level goods, a food and medical services GET exemption is a good start to easing our tax burden.
3. Wireless surcharge repeal: HB60 and SB783 eliminate the 66¢ monthly surcharge on wireless telephone accounts, originally established to fund the wireless enhanced 911 service. The service has been established; why are we still paying for it?
4. Flat income tax: HB1900 implements a flat income tax by 2015. There are two definitions of “fair” taxes: one rate for all (a “flat” tax) and a lower rate for the rest of us (a “progressive” tax, or those who can, pay – minus the tax credits and exemptions, of course).
5. Tax reform: HB1319 and SB1203 create a task force to reform tax laws. A high school student should be able to understand and explain our tax code. Maybe we could start with this legislative session.
Please think about these tax issues and how they may affect you and everyone around you. If you feel strongly about an issue, speak out! Talk to your family and friends, let your Hawaii legislators know about it, and write letters to the local newspapers.