State should collect rail-transit surcharge
The Legislature has rejected proposals that the city, instead of the state, collect the excise tax surcharge to fund rail transit.
GOVERNOR Lingle appeared last year to have stared down legislative leaders in demanding that the city instead of the state should collect the excise tax surcharge to fund Oahu's rail transit system. However, the Legislature has refused to bend on the issue
, coming to the logical conclusion that the state should collect the surcharge by simply tacking it onto the state excise tax.
Lingle, who supported a tax increase to fund rail transit, threatened to veto a bill last year that authorized the counties to levy such a surcharge because of its assignment of collection to the state Tax Department. She withheld the veto only after Senate President Robert Bunda and House Speaker Calvin Say agreed to urge this year's Legislature to change it by assigning the chore to the counties.
Senate and House committees decided to hold onto bills that would have done that. It is more sensible for the state to collect 0.5 percent added onto the state's 4 percent general excise tax than for the state to create a new bureaucracy.
The state tax director estimated last year that the state's cost of collecting the $150 million in taxes would amount to $13.6 million over the first four years. Hannemann estimated that duplicating the state system would cost $52 million over the same period.
Tax Director Kurt Kawafuchi played the good soldier in complaining that "hardship and burnout" would plague his department's employees. Legislation that would provide Kawafuchi help to implement the city surcharge should alleviate the department's extra burden.
Finding it difficult to justify the city's duplication of the state system, Lingle recently talked about privatizing both the state tax and the city surcharge "so that taxpayers weren't filing two times." Powerful public-sector employee unions naturally oppose such a move, making such privatization politically unrealistic.
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