House Democrats defeat
proposed tax exemptions

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By Pat Omandam
pomandam@starbulletin.com

As a landlord of a condominium unit, House Vice Speaker Sylvia Luke believes she and others would gain financially if rent were exempted from the state General Excise Tax.

Even so, Luke opposes a bill (HB310) to exempt food, rent and medical services from the excise tax because it wouldn't help those who really benefit from tax relief, namely the poor and needy.

"Rather, it's probably going to end up in a windfall to the landowners like myself," Luke said.

"And at this point in time, I'd rather have that money go to the real needy as opposed to myself," she said.

House Democrats once again turned back a Republican effort yesterday to approve a bill eliminating the tax on these services after the minority group recalled the measure to the House floor last week.

Republican leaders say the bill would mirror efforts in the U.S. Senate to exempt such taxes. They add it would stimulate the economy because people would likely go out and spend the additional money rather than save it.

"This is an opportunity for the House to stand up for economic stimulation and to do something for the working people of Hawaii, something dramatic that will really cause our economy to surge forward," House Minority Leader Galen Fox (R, Waikiki) said.

Maui Republican Chris Halford added the excise tax places a far greater burden on the less fortunate and further divides the "haves from the have-nots" in the community.

"This is a simple bill. It simply eliminates the taxes that we levy on groceries, doctors' bills and rent," he said.

But House Economic Development chairwoman Lei Ahu Isa (D, Liliha) said with limited resources available to the state, the measure is premature.

She said the exemptions will not achieve their altruistic objectives and would probably have negative consequences.

"We have to find the solutions by other means," Isa said.

State Rep. Terry Nui Yoshinaga (D, Moiliili), who introduced the bill Republicans recalled last week, said she doesn't support it now because the timing is in question.

Yoshinaga said when she introduced the bill last year, the state economy was improving. But a year later, all that has changed.

She said it is still a worthy idea when the resources are available.

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