Looming tax hikes fill stores, fuel tanks
Consumers rush to beat excise and gas tax increases today
It may be pennies on the dollar, but they sure add up fast, and that's why many Oahu consumers were buying gasoline and even computer gear before the knell of midnight yesterday.
The reasons: the general excise tax goes up today, and a gas exemption that was saving consumers about 11 cents a gallon ended yesterday.
Many shoppers took advantage of the last day to spend money without paying for a new tax hike on all goods.
Vani Aweau saved a little over $1* by getting computer supplies yesterday and beating a general excise tax hike that takes effect today to fund a mass transit system. But for Aweau, who spent $200 at CompUSA, the good news stopped there.
The 43-year-old Liliha resident is not happy about joining every Oahu consumer who -- with every purchase they now make -- will automatically pitch in for an alternative method of transportation for Honolulu.
Why?
"I probably won't be using it," Aweau said.
A county surcharge tax that state lawmakers approved last year is raising the 4 percent general excise tax in the City and County of Honolulu to 4.5 percent. The additional tax is projected to bring in $150 million a year to fund a mass transit system, which is expected to cost at least $4.6 billion.
For businesses to pass on the entire amount to their customers, the state Tax Department has determined that they can charge 4.712 percent.
That would have added $2.18 to the $400 bill* of Eric Youn, who was at Sam's Club yesterday buying an air conditioner and other goods.
Youn, a social work professor who recently moved here from Texas to work at the University of Hawaii, doesn't expect to ride the transit system, either, because he is looking to buy a home east of Manoa, outside the reach of routes currently proposed in a fixed guideway system.
But he still supports the GET increase, saying its revenue will go toward a project that should ease traffic and eventually contribute to a healthier economy and benefit all residents.
"I always believe that mass transit is a positive thing," said Youn, who rents an apartment in Waikiki. "If the tax is mainly based for development of public transportation, then it is a good investment."
MANY MOTORISTS were disappointed with another gas price increase on the horizon, with the expiration yesterday of a gas tax exemption worth about 11 cents a gallon.
"It's the last day before the tax. I'm not looking forward to it, but I've got a few hours left," said Michelle Leonard of Waikiki as she waited in line at the Costco Wholesale gas station in Iwilei.
The state excise tax exemption passed in 1980 to encourage the development of alternative fuels took effect in April, when 85 percent of all gasoline sold in Hawaii was blended with 10 percent ethanol under separate regulations.
Yesterday, Hawaii had the highest statewide average in the nation for a gallon of regular unleaded gasoline at $2.827, according to AAA's Fuel Gauge Report.
Costco General Manager Robert Loomis said transactions at the gas station had had the largest impact on overall sales recently.
"It's been a good increase, and certainly it's crescendoed toward the weekend," he said. "It's a happy surprise."
The additional tax of 11 cents per gallon means consumers pay $2.20 more for 20 gallons of gas.
"That's enough for the average person to fill up (in advance), and I think that's what we're seeing right now," Loomis said. "They're coming in maybe one more time this week than they normally would."
It was still too early to figure what prices would be when the gas station reopened at 4:30 a.m. tomorrow, Loomis said.
Customer Tin Shing Chao said he was filling the tank of his second car before the gas tax exemption expired.
"The first one was on the way," he said. "This one, I came back for a special trip."
At Freedom Gasoline, where gas was $2.64 per gallon of regular unleaded, Kalihi resident Sabrina Bell-Keawe pumped gas into her blue Jeep sport utility vehicle.
"It's already bad enough, and it's going up again," she said.
CORRECTION
Tuesday, January 2, 2007
» A general excise tax increase that began yesterday on Oahu will add $1.09 to a purchase of $200, and $2.18 to a bill of $400. A Page A1 article yesterday incorrectly reported that the new rate would add about $10 to a $200 purchase and $20 to a $400 bill.
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