County taxing power
on hold in committeeMayor Harris says that a rail
system depends on the bill passing
A move to allow the counties to charge their own sales tax apparently has faltered in the state Legislature.
If the tax plan is not approved, plans for a new Honolulu rail transit system will be stalled on its tracks, supporters say.
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The plan had the support of Honolulu Mayor Jeremy Harris, who saw the new taxing authority as crucial to fund the proposed $2.6 billion rail-transit system.
But Sen. Donna Kim, chairwoman of the Senate Tourism Committee, said the bill didn't move out of her committee. Giving counties the power to charge a sales tax is not a popular idea at the Legislature, Kim said.
"The House said it didn't want any new taxes, so we didn't think it was necessary to pass out anything, because it would be fruitless," said Kim (D, Kalihi Valley-Halawa).
Harris said yesterday that Honolulu will not be able to afford a rail system without the ability to raise new taxes.
"It is unfortunate and I am disappointed, but it is clear that a fixed-rail system is not going to be free," Harris said.
Kim said others felt that voters would see it as a tax increase, although she had argued that the bill didn't guarantee a tax hike. Instead, it would give the counties power to charge a sales tax.
"The Senate passed the bill last year and we didn't see it as raising taxes, but the House sees it differently," Kim said. "So it is disappointing, but it is not something that we are going to split hairs over."
In the 2003 legislative session, the Senate Ways and Means Committee approved both raising the general excise tax to 4.5 percent from 4 percent and giving the counties the chance to create a new sales tax of up to 1 percent.
In return, the counties would have dropped their share of the hotel room tax collection, a loss of $35 million for Honolulu. But Harris supported it, because of the extra money that could be raised from a new sales tax.
Calvin Say, House speaker, said yesterday the position against the county option tax -- a measure also pushed by Gov. Linda Lingle -- hasn't changed and the Democratic majority would continue to reject it.
Harris saw the rejection as a delay to the city's plans for rail transit.
"The longer the Legislature puts if off, the longer we will be without a transportation solution," Harris said.
Noting that the current election season is likely causing lawmakers to refrain from granting the county authority to raise taxes, Harris said he hopes there will be a change after the November elections.
"When the election year passes, I hope the Lingle administration and the House and Senate will be able to get together," Harris said.
