Repeals of taxes, gas cap advance

Isle House Dems hope cutting taxes will lower gas prices

Hawaii's highest-in-the-nation gas prices continue to bedevil the state Legislature, which is now considering scrapping the gas cap and dropping the state excise tax on gas sales.

Democrats in the House yesterday voted to suspend the controversial gas cap, which was first approved in 2002 and went into effect last year.

House lawmakers also advanced a measure aimed at bringing down the cost of gas by temporarily suspending the 4 percent general excise tax on gasoline for two years.

At current prices, the measure could cut about 8 cents a gallon from the cost of regular gasoline. Based on average household vehicle consumption of 12 gallons a week, a family with two cars could save about $200 over two years.

"This will help with severing our reputation that we have one of the highest gas taxes in the nation," said Transportation Chairman Joe Souki (D, Waihee-Wailuku).

The House Democrats also advanced their proposal to suspend and ultimately repeal the gas cap.

It would suspend the cap in July and, in its place, adopt strict oversight measures aimed at determining whether oil companies are fairly pricing gasoline.

Price caps would be repealed on Jan. 1, 2008, if the transparency measures are determined to be working.

"This bill provides for suspension, it provides for transparency and a period to work with the oil refineries," Souki said.

The measure passed with only Rep. Bev Harbin (D, Kakaako-Downtown) voting no. Harbin said she supports Sen. Ron Menor's proposals to amend the price-cap law.

In the Senate, Menor (D, Mililani), Consumer Protection Committee chairman and the author of the gas cap, changed his mind and said he would hold a hearing on the gas-cap repeal bill. Before yesterday, Menor had said he wouldn't hear the gas-cap repeal.

Menor's action came in the face of increasing criticism from some of his own Democratic colleagues that the gas cap was politically dangerous.

"No matter how hard you try to spin this, the wholesale prices are lowered, but the consumers believe it is not working," Sen. Donna Mercado Kim (D, Kalihi Valley-Halawa) said.

Sen. Bob Hogue (R, Kaneohe, Kailua) noted, "It is obvious that it doesn't work, because every week the gas price spikes upwards."

Meanwhile, with only GOP opposition, Democrats in the Senate approved a proposed constitutional amendment that could eliminate the state's mandated tax rebate.

When the state runs a surplus for two years in a row, the Constitution requires that the surplus be rebated to taxpayers. Democrats, led by Sen. Brian Taniguchi (D, Moiliili-Manoa), said when the surplus is small and the resulting rebate only a dollar, taxpayers say it would be better to allow the state to use or save the money.

"Of course, if our financial plan can accommodate a more substantial refund, the option to do so remains," Taniguchi said.

Gov. Linda Lingle joined the debate yesterday afternoon by issuing a news release opposing the proposed amendment.

"We have the responsibility to ensure the people who created this surplus share in the benefits," Lingle said.

The House also advanced a measure that critics said would change the law to grant approval to the Hokulia development project on the Big Island.

Parties in a lawsuit that held up the development of the 1,550-acre project recently reached a settlement in a lawsuit alleging that the project is illegally being built on agricultural land.

Water and Land Use Chairman Ezra Kanoho (D, Wailua-Koloa) noted that even though a settlement was reached, the change will help prevent similar disputes in the future.