Many sit fence
on task force plan

Less than a month remains
before the Legislature weighs in

By Rob Perez
Star-Bulletin

Some praise it. Some pan it. Many aren't sure what to think.

Less than a month before the start of the legislative session, many business, labor and civic groups still haven't staked out positions on what will be the No. 1 issue before lawmakers: whether to adopt the Economic Revitalization Task Force plan to revive the economy.

Some groups are awaiting more information before they make a decision.

Some are reluctant to endorse the panel's plan, but they don't want to oppose it either, saying they like many of the recommendations.

Others simply haven't considered what to do.

The 26-member task force, dominated by big business, government and labor interests, developed a package of proposals that includes the biggest income tax cut in state history.

But it also includes a nearly 34 percent increase in the general excise tax, easily the most controversial part of the package.

The task force has encouraged people to consider the plan in its entirety, saying the changes collectively will stimulate the economy, create jobs and result in savings to all taxpayers.

But critics and even some plan proponents say the GET increase will be tough to swallow, especially for the poor, elderly and struggling small businesses.

"That's the sore point," said Jan Berman, president of the Retail Merchants of Hawaii, which is surveying its 200 members to decide whether to endorse the overall plan. She said initial responses have been positive.

At the Hawaii Association of Realtors, which represents about 5,500 members statewide, the GET proposal generates strong opposition -- but not strong enough to prompt the association to oppose the entire plan.

Bill Ramsey, chairman of the group's legislative committee, said the association supports many of the task force's recommendations, including reducing income tax rates, "but we're totally opposed to the GET increase."

Because Realtors work on a commission basis, they can't pass along an increase, Ramsey said.

Also, property owners already facing a difficult rental market would have a tough time increasing rents to offset a rise in the GET, he said. "They're on the very edge right now," Ramsey said.

The GET proposal also is panned at the Hawaii Business League, which represents roughly 1,300 small businesses.

Tim Lyons, executive vice president of the league, estimates that 10 percent to 15 percent of small businesses, including travel agents and manufacturer representatives, earn commissions and would be hurt by a GET increase.

"For all these kinds of people it's going to come directly out of their pockets," Lyons said.

The League of Women Voters, while not taking a position on the overall plan, is urging that the GET proposal be scrapped, saying lower-income groups would be hit hardest by an increase.

The American Association of Retired Persons, which boasts a statewide membership of roughly 120,000, also believes the tax changes would hurt the elderly and poor.

For that reason and others, it is opposing the entire plan.

"Only the wealthy basically benefits from it," said Dennis Shiroma, chairman of the group's legislative committee.

But as unpopular as the GET proposal is, some organizations say it will be offset by the 40 percent and 50 percent reductions in personal and corporate income taxes, respectively, and the reduction of the so-called pyramiding effect of the GET.

What's more, they add, the proposals are far better than doing nothing."It's not a perfect plan, but at least it's a step forward," said Walter Kupau, head of the 6,900-member Carpenters Union, which has endorsed the plan.

The Hawaii Restaurant Association likewise supports it.

"Our position is anything that will help the economy will help our industry," said Kathy Masunaga, executive director of the association. "We should have done this two years ago."

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Full text of the Governor's
Economic Task Force recommendations.