Kauai senator
knocked on taxes

A GOP leader assails Gary Hooser
for his past failure to file excise
tax returns

LIHUE » State Senate Minority Leader Fred Hemmings has accused Democratic Kauai Sen. Gary Hooser of hypocrisy for supporting an increase in the general excise tax despite owning a business that did not pay the tax for years.

Hemmings (R, Lanikai-Waimanalo) also said Hooser, who is running for re-election, committed an "outright falsehood" in a Senate floor speech last year in support of a one-cent (25 percent) increase in the general excise tax to fund education. The idea died later in the Senate.

"I'm a businessman," Hooser told the Senate, according to the official Senate Journal. "I started my business in 1985, and there were times then and now when I paid my taxes before I paid myself."

Hemmings said nothing could be further from the truth.

"When you stand up on the floor supporting what would have been the largest tax increase in state history and you went 11 years without paying your taxes, that sure speaks to his integrity," Hemmings said in an interview last week.

He produced a copy of the compromise that Hooser and his partner reached with the state Tax Department.

The document shows that their Kauai-based magazine company, H&S Publishing, did not file excise tax returns for the years 1985 through 1990. The tax rate used for 1991 and 1992 were in dispute. The company filed tax returns from 1993 to January 1996 but did not pay any money. H&S also failed to pay withholding tax from 1993 to 1996.

In all, in 1996 H&S owed $89,875 in back taxes and $50,440 in interest and penalties, a total of $140,315.

The state agreed to settle for only the principal, $89,875. It then allowed H&S an additional tax refund of $17,421 for 1992 by applying a one-time Natural Disaster tax credit passed after Hurricane Iniki and credited the company for a $1,000 payment made before the settlement was reached.

The amount paid by Hooser and partner Robert Self in 1996 came to $71,454, or about half of what the state originally said was owed.

The Tax Department justified the compromise by saying that if it seized H&S Publishing, the business assets were worth only $10,500, far less that what the state received in the settlement.

Hooser said last week that all of this was "an old issue" that came up in his initial Senate race and both of his races for County Council.

However, it never came up in any campaign statements and was not reported in the news media.

"This started 20 years ago. The settlement with the state was eight years ago, before I ran for public office.

"We (his company and the state) reached a legitimate compromise and we paid our taxes," Hooser said. "The state was satisfied with the settlement and the matter has been closed since 1996.

"This is an act of desperation by the Republican leader in the Senate and my opponent," he added.

Hooser, a freshman senator, is fighting against a challenge from former two-term Kauai Mayor Maryanne Kusaka, a Republican, for the Kauai-Niihau seat.

Kusaka declined comment. "I'm not going to say anything. It didn't originate here," she said.

Hooser and Self ran H&S Publishing from 1985 until last January.

"Looking back, sure, we should have filed returns those first five years even if we didn't have the money to pay the tax," Hooser said.

"But we were a struggling business, and we managed to stay open when many other small business closed and we kept 14 people employed. The business didn't become profitable until after 1996."