GET raise stymies tax filers
A new general excise tax form next year aims to lower errors
Confusion over the new Honolulu tax surcharge is causing the state to redesign its general excise tax forms for next year.
Kurt Kawafuchi, state tax director, said that during the first two months of the new tax collection period, 30 percent of Oahu taxpayers were either filling in the forms incorrectly or not adding the special half-of-1 percent tax.
The GET increase is for all transactions occurring in Honolulu, but the calculations and information about the half-percent tax are listed on the back of the GET form and that has taxpayers confused.
"I think it is tedious and stupid," said Jack Sullivan, president of Hawaii Business Systems, which helps small businesses file forms for the government.
"It is just too confusing for the general public. I go out to people and they are saying: 'What does this mean, what about that?' It is just humbug," Sullivan said.
Republican state Sen. Sam Slom, who runs Small Business Hawaii, said many of his members are also having problems.
"If you ask me, there is still some confusion and I assume that they do have a problem with compliance, people aren't used to doing it that way," Slom said.
Kawafuchi said his department has held seminars and produced a 26-minute online video about the new tax that started Jan. 1, 2007. The information is available at www.hawaii.gov/tax.
For January and February, Kawafuchi said, taxpayers had an error rate of 30 percent on the new forms, which is twice the average rate.
"There was a learning curve at the beginning. So we sent out a one-page letter in color to everyone with a general excise tax license," Kawafuchi said.
Now the Tax Department is working on a new series of letters to go out to tax filers who made specific mistakes.
"We are also working to make the new form more user friendly," Kawafuchi said.
The GET is confusing because while it has been 4 percent for decades, the Legislature allowed the city to raise the tax to 4.5 percent on Oahu transactions to pay for a mass transit system.
Any tax that varies by county is going to be hard to understand, Kawafuchi said.
Slom praised Kawafuchi's efforts to get taxpayers to understand the new tax and the resulting form.
"I give Kawafuchi and his staff credit. They have been meeting with many groups, but I don't think the information has filtered down," Slom said.
To redesign the new form, Kawafuchi is taking a prototype of a new form out to taxpayers and business groups.
"The bookkeeper and CPA types love the new summary form and we are trying to reach out to a broad cross-section," Kawafuchi.
The changes won't come in time for Sullivan, who says the original form "looks like it was done by some guy in a closet."