Senator proposes tax increase to fund schools


POSTED: Friday, January 09, 2009

Sen. Norman Sakamoto wants to save the public school system from a $40 million budget cut by raising the 4 percent state excise tax by 1 percentage point.

To help balance the 25 percent tax increase (21.2 percent on Oahu), Sakamoto is also proposing dropping the excise tax on food and medical services, adding a tax credit for housing rentals and doubling the standard deduction allowed Hawaii taxpayers.

Sakamoto (D, Salt Lake-Foster Village) made his proposal Wednesday during a closed-door Democratic caucus, held to map out strategy for the upcoming legislative session.

Initial reaction by members of the 23-member Senate Democratic majority was negative.

“;They weren't cheering,”; Sakamoto, chairman of the Senate Education Committee, said.

Senate President Colleen Hanabusa agreed that the plan did not win much support.

“;It would be safe to say that everyone is very cautious. The majority of the majority (Democratic) senators are probably not inclined to entertain that kind of thing,”; Hanabusa said.

But Sakamoto argued that recent studies show the public school system is already underfunded by $278 million, and the proposed state budget is likely to cut the $2.4 billion school budget by $40 million.

His proposal, Sakamoto said, will help reform the state tax code, which he called “;regressive.”;

“;There have been numerous proposals suggesting ways to shift the burden to those who can afford to pay more,”; Sakamoto said. “;Those who have more and spend more, they will spend more and pay more, so if you buy an Infinity or your Lear Jet, by all means pay more.”;

Republicans say they have heard the talk about tax reform before but do not believe it.

“;It has been a Republican position for 40 years to eliminate the general excise tax on food and medicine,”; said Sen. Sam Slom (R, Diamond Head-Hawaii Kai).

Asked about Sakamoto's tax increase proposal, Slom said, “;I don't think it is the right medicine for what ails us.”;