Republicans push
for isle holiday
tax reprieve

The House GOP calls for a special
session but says chances are
slim for such stimulus

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By Bruce Dunford
Associated Press

State House Republicans renewed their call yesterday for another special legislative session before Christmas to enact a tax holiday they say will stimulate the state's slumping economy, saving businesses and jobs.

At a news conference fronting the Chun Kim Chow shoe store on Fort Street Mall, they acknowledged that the Legislature's majority Democrats and Gov. Ben Cayetano are unlikely to heed their call.

Last week, Cayetano scoffed at the GOP's tax holiday proposal as "good politics" at a time the state needs "sane, sober, realistic proposals."

Rep. Mark Moses, R-Ewa-Kunia-Makakilo, however, said it is all about "good politics" on the part of the Democrats.

"If they were to pass something like this, and it worked, how bad would it look for them to have been holding back on this kind of a proposal for all these years," he said. "Even if it would help Hawaii, they don't want it to work because it's not their idea."

Chun Kim Chow announced last week the 93-year-old company's 18 stores will close at the end of the year.

The Republicans said a 10-day holiday from the state's 4 percent general excise tax could make a difference in keeping other businesses alive until the economy improves.

Rep. Barbara Marumoto (R, Kahala-Waialae-Maunalani Heights) said she "would guess" the tax holiday would cost the state $5 million to $10 million, but Rep. Joe Gomes (R, Waimanalo-Kailua) said that is not what is important.

The Republicans point to a bill before Congress to reimburse states fully for the loss of tax revenues from tax holidays, but that measure has stalled.

A 10-day hold on the 4 percent excise tax, which generates about half of the state's $3.15 billion annual general-fund tax income, would cost the state about $40 million in tax revenues. That would be on top of the $150 million shortfall the state's Council on Revenues forecast last week.

Rep. Charles Djou (R, Kahaluu-Kaneohe) said the idea is to stimulate consumer confidence and generate more activity.

The Republicans said a tax holiday's stimulus would offset the revenue loss, but Tax Foundation of Hawaii President Lowell Kalapa disagreed.

Tax holidays distort spending patterns, distort retail hiring, save money for people who have money and would be spending it anyway, give only modest savings and provide no guarantee against price hikes offsetting the tax savings, he said.

"It would be better to reduce the income tax rates and put more money into my wallet," he said.

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