City councilman
proposes suspending
Oahu gas taxes

A proposal to suspend the 16.5-cents-per-gallon tax on gasoline sold on Oahu faces an uphill battle in the City Council.

Councilman Charles Djou said yesterday he will introduce a measure that would suspend the county fuel tax for six months. Djou estimated the action would cost the state about $21 million, which would have to be offset by reductions in government spending.

"I have been a persistent advocate of reducing spending," he said. "Unfortunately, I have not always been joined by my colleagues in my efforts to reduce spending here in City Hall."

He noted the Council increased other taxes this year, including the vehicle weight tax, that could be used to balance any loss in fuel taxes.

"I'm realistic that it will be a challenge to get the gas tax down," Djou said.

Council Chairman Donovan Dela Cruz said a suspension of the gas tax would have a "ripple effect" that could lead to cuts in other city services.

"I would hate to be in a position where we're cutting services and affecting people who need them the most," he said.

Council Budget Chairwoman Ann Kobayashi agreed.

"It's certainly something that we all would like, but in order to be responsible we couldn't do it at this time," she said.

A spokesman for Honolulu Mayor Mufi Hannemann said the administration, at this time, does not support a suspension of the county's gas tax. Hannemann press secretary Bill Brennan said the administration is closely watching what effect the state's gas-price cap law is having on consumers.

Meanwhile, the statewide average for a gallon of regular unleaded remained the highest in the country, at $3.58 a gallon, according to AAA's Fuel Gauge Report. The national average was at $2.92 a gallon, the auto club said.

Djou's proposal is similar to one offered Wednesday on Maui by Mayor Alan Arakawa. He proposed suspending the 18-cents-per-gallon tax on Maui, Molokai and Lanai for two months to allow gas prices to stabilize and provide time for the price-cap law to either prove itself or be discontinued.

There was no immediate comment on the proposal from key Maui Council members. Neither Chairman Riki Hokama nor Budget Chairman Dain Kane returned telephone messages left at their offices yesterday.

County fuel taxes vary, with Maui County's rate being the highest. The City and County of Honolulu is second highest, followed by Kauai's 13 cents and the Big Island's 8.8 cents.

Proposals to cut fuel taxes have been offered by Republicans, who oppose the price cap.

Gov. Linda Lingle said she was exploring the possibility of suspending the 4 percent general excise tax on gasoline. House Majority Leader Marcus Oshiro said any such proposal would have to be thoroughly examined because of the tax money that would be lost.

Democrats say the price cap law should be given time to work and that they are confident that consumers will benefit in the long run.

Lingle said she will attempt to repeal the caps next session.

One oil company already has gone to court to have the caps repealed. Shell Oil filed a petition this week asking the state Supreme Court to review the Public Utilities Commission's implementation of the law.

Shell, along with Chevron USA Inc., Tesoro Hawaii Corp. and the Hawaii Petroleum Marketers Association, had asked the PUC in July to delay implementation of the price-cap law to allow further study of the state's gasoline market.

The commission rejected all arguments, saying some were "incomplete and too unclear," and others "did not meet the burden of showing that the commission's decision is unreasonable, unlawful and erroneous."

Shell said it is complying with the law while trying to have it repealed.

"Shell works hard to ensure that our wholesale gasoline pricing is fair and competitive, and believes a free and competitive market ultimately serves the best interest of the consumer," the company said in an e-mail statement.

Lisa Kikuta, chief researcher at the PUC, said the commission does not comment on pending matters.

Shell's petition was filed with the PUC, which forwards it to the Supreme Court for review.

Some businesses are taking their own steps to help ease the gasoline burden for employees and consumers.

Pacific LightNet President Pat Bustamante announced this week that all employees would receive an additional $50 in their paychecks to help defray the added cost of gas. He also is offering a free bus pass to every employee to encourage mass transit use.

Castle Resorts & Hotels this week began a promotion offering Hawaii residents a free compact rental car and free gas when customers book a stay at its properties on Oahu, Kauai, Maui and the Big Island. Rates range from $97 on Oahu to $179 on Kauai, until Dec. 15.

"With gas prices soaring and in the news every day, we created this promotion to give real value to local residents traveling to neighbor islands," Castle President Alan Mattson said in a news release.

GAS CAP HELP How to contact the state about Hawaii's gas cap law: Public Utilities Commission www.hawaii.gov/budget/puc/gaspricecaps Commerce and Consumer Affairs www.gascap.hawaii.gov Hotlines for consumers: 586-2769, on Oahu; (800) 830-4295, toll-free, from neighbor islands. Business, Economic Development & Tourism www.hawaii.gov/dbedt/ert/gasoline/gasoline.html Hotline for owners and operators of gas stations: 586-2752 E-mail: gasoline@dbedt.hawaii.gov AAA Fuel Gauge Report: www.fuelgaugereport.com