Agencies differ over
tax relief for military

Some disagreement within the Lingle administration surfaced yesterday over a proposal by House Democrats aimed at providing tax relief for Hawaii's military personnel.

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A governor's spokesman said the disagreement was due to two agencies approaching their testimony from different points of view.

Under the proposal, local servicemen and women who declare Hawaii as their home state would be exempt from paying state income tax while they are stationed or deployed elsewhere.

The measure was strongly supported by Maj. Gen. Robert Lee, director of the state Defense Department, but opposed by the Department of Taxation, which said the measure would negatively affect Gov. Linda Lingle's priorities by throwing her proposed two-year budget out of balance.

Lingle spokesman Russell Pang said the Tax Department supports military personnel but was testifying on the bill only from a fiscal perspective, "so it's understandable that there may be different viewpoints."

He added that the two agencies would follow the proposal as it moves forward and reconcile any differences in future testimony.

The proposal was passed yesterday by the House Public Safety and Military Affairs committees. It still needs the approval of the Finance Committee and the full House before going to the Senate for consideration.

Reserve and National Guard members also would be included in the exemption.

"It's a pride issue, and I think it's a fairness issue, too," Lee said.

The proposal encourages local military personnel to continue their legal residency in the islands and not claim as their home of record an income tax-free state such as Florida, Texas or Nevada, Lee added.

"Some active-duty local guys talked to me about this," he said. "They said, 'Look, we want to be proud to say that we're Hawaii residents, and if we get assigned here -- Pearl Harbor or Hickam or Schofield Barracks -- we're using the resources of the State of Hawaii and we'll gladly pay taxes at that point.'"