Construction tax Hawaii retailers, hotels and unionized carpenters are banding together this Legislative session to support the creation of a tax credit for commercial construction and renovation, similar to tax credits approved last year for hotel and home construction following the Sept. 11 attacks.
credit sought
A coalition is pushing for a
break to help commercial buildingBy Tim Ruel
truel@starbulletin.comIt's a unique alliance for a unique economic circumstance, said Carol Pregill, executive director of trade association Retail Merchants of Hawaii. Other members of the group include the Hawaii Hotel Association, Hawaii Business Roundtable, Hawaii Attractions Association and the Pacific Resource Partnership, which is an affiliation of local unionized contractors and the Hawaii Carpenters Union.
"The burden on us in working with this kind of legislation is to show that it's not revenue neutral, but it can create revenue, by jobs, by additional taxes, by stimulating the economy in additional ways," Pregill said.
During the third special session last year, Cayetano signed a bill into law that raised the tax credit for hotel renovation to 10 percent from 4 percent, and created a 4 percent tax credit for construction and remodeling of homes. Cayetano had threatened to veto the legislation.
A survey of the members of the retail merchants association shows that its members have spent roughly $1 billion on construction and renovation in the past five years, Pregill said. A tax credit would encourage members to move forward sooner with plans for future construction, and would possibly promote additional building, she said.
Other measures that will be introduced during the Legislative session that begins tomorrow will be a rehash of small business bills that didn't make it last year.
Business advocates are optimistic they will get a boost from Hawaii's economic downturn and the fact that every single seat in the Legislature will be for election later this year.
"We're going to try again," said Bette Tatum, long-time state director of the National Federation of Independent Business. "The name of the game is never give up."
As usual, the federation is tackling the high costs of health care and workers' compensation insurance, which cripple small business in Hawaii, Tatum said.
Sen. Norman Sakamoto (D-Moanalua) is again pushing a bill to kill the payment of workers' compensation to employees who claim stress-related injuries from job transfers or promotions. "It's too big a door for some people who want to abuse the system," Sakamoto said. The same bill died almost immediately last year after it was referred to the Senate Labor Committee.
The larger problem is that such claims have led to an increase in workers' compensation rates, which have become extremely burdensome on small businesses, Tatum said. "We can't take increased anything," she said.
Some small businesses will see their workers' compensation rates leap 30 percent to 50 percent in the first quarter of this year, largely because of the rising costs of reinsurance, said Bev Harbin, executive director of the Kakaako Improvement Association. "You're going to finish off a whole layer of small business people."
Sakamoto is also introducing Legislation that would get rid of inconsistency in the rules that provide exemptions to state workers' compensation laws. Currently, partnerships do not need workers' comp coverage if the only employees are the partners themselves, according to a position from the state Department of Labor and Industrial Relations. But that exemption does not apply if a partnership is registered with the state as a limited liability partnership, or LLP.
Rep. Bertha Kawakami plans to propose a bill that would decrease the contribution that a Hawaii employer is mandated to make toward employee health insurance.
Currently, employees pay no more than 1.5 percent of their wages. The bill would not change the 1974 Prepaid Health Care Act, but would add language to the insurance code.
"It's something we've been wanting for years," Tatum said.
Other bills of interest to small business:
>> A proposal to save the Hawaii Small Business Regulatory Flexibility Act, which was enacted in 1998 during a fervor to save local business and expires in June. The act created the position of a small business defender and a regulatory review board.>> A bill to exempt federally licensed wireless communication businesses from regulation by the state Public Utilities Commission. A similar bill survived early in the session last year in the House, but died after it crossed over to the Senate.
>> A measure to support a 10-day holiday of the state general excise tax, which would piggy-back the Sales Tax Holiday Act pending in Congress.
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