Credits cost state
The state Tax Department
reports tax revenues tumbled
27 percent in April from
that month of 2002
A huge amount of Hawaii's monthly tax take for April was wiped out by tax credits for everything from homeowners' remodeling expenses to corporate investments in high-technology and research.
Last month saw a drop of 27.3 percent, or $87.5 million, in taxes going into the state general fund compared with April 2002, according to a report released today by the state Tax Department.
Individual income tax collections for April were down 56.3 percent, a drop of $68.5 million, compared with April 2002. Corporate income tax collections also had a steep drop, falling 36.9 percent, or $6.1 million, compared with the previous April.
That brought the cumulative tax take for the first 10 months of the fiscal year down 0.4 percent from the same time last year, raising serious questions about how the full year will turn out, said state Tax Director Kurt Kawafuchi, and making it likely that the fiscal year tax revenue will be much less than the latest estimate by the Council on Revenues.
From July 1 through April 30, the state paid out $45.9 million in income tax refunds to corporations, more than the $41.8 million it received in corporate income taxes.
"We've known for months that Act 221 (technology research credits) and other uncapped tax credits turned out to be far more generous than the Legislature realized when enacting them two years ago," Kawafuchi said.
"If this trend continues, we expect that tax revenues will increase by only 0.7 percent for the entire fiscal year, which is about $100 million less than projected by the council just two months ago," he said.
The good side of the latest figures was that the general excise take was up 8.7 percent for the fiscal year to date, after a 5.1 percent decline for April.
Kawafuchi said that reflects a strong economy, since the general excise tax applies to a large range of transactions. General excise and use taxes totaled $149.8 million for April and $1.49 billion for the fiscal year so far. General excise and use taxes make up about 57 percent of the general fund tax take.