25% hike in
excise tax sought

The raise to 5 percent from
4 percent would go toward
building a rail transit system

State House and Senate leaders want to move ahead with plans to raise the state general excise tax to fund a rail transit system and other transportation projects.

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The issue still undecided is how much of an increase is needed.

Senate leaders met for an hour yesterday with representatives of 13 unions and five general contractor groups, plus Mayor Mufi Hannemann, U.S. Rep. Neil Abercrombie and House Speaker Calvin Say.

The meeting was designed to lobby the Senate to empower the counties to raise the general excise tax to 5 percent from 4 percent, which would be a 25 percent jump. The Senate now wants to raise the tax to 4.5 percent, a 12.5 percent increase.

"As we talk it through, we will come to some sort of consensus between the House and Senate," Senate President Robert Bunda said.

"It was a very good discussion between labor and the legislators," he said.

"Labor wanted us to at least consider the 1 percent increase," Bunda added.

The city, which would be responsible for building the rail transit line, is asking the Legislature to allow taxes to rise to 5 percent.

"I am here as a proponent of a local transportation solution," Hannemann said before the meeting.

"I think this is our last chance, and I don't plan on spending any more time down here if we don't get something positive this year," Hannemann said, adding that the city wanted a full 1 percentage point increase.

The House and Senate also met in conference committee yesterday to start negotiations on the tax bill.

Rep. Joe Souki, House Transportation Committee chairman, said he thought it was possible to reach a compromise by the Friday deadline to finish drafting all legislation for this session.

"I think the House will be able to pass a tax bill without too much trouble, but the Senate is somewhat divided," Souki said.

"It is my estimation that we can get the bill through, although I don't know if it will be 1 percent or one-half or one-third of a percentage point," he said.

Legislators are also considering different variations of how long to impose the tax increase.

Hannemann said it should be open-ended, but if there were a cap, he asked for it to be at least 10 years for 1 percentage point and 15 years if taxes go up a half a percentage point.

Meanwhile, this morning, tax protests coordinated by a morning radio talk show are planned at the state Capitol to highlight the extra burden caused by a tax increase.