The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Senate Committee on Housing on Feb. 6, 2025.
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Feb. 6, 2025, 1:05 p.m.
Hawaii State Capitol
Conference Room 225 and Videoconference
To: Senate Committee on Housing
Sen. Stanley Chang, Chair
Sen. Troy Hashimoto, Vice-Chair
From: Grassroot Institute of Hawaii
Ted Kefalas, Director of Strategic Campaigns
RE: SB1333 — RELATING TO TAXATION
Aloha Chair Chang, Vice-Chair Hashimoto and members of the Committee,
The Grassroot Institute of Hawaii opposes SB1333, which would allow Hawai‘i, Maui and Kaua‘i counties to use their excise tax surcharges for housing and transportation infrastructure.
It would also extend the expiration date of Honolulu’s GET surcharge from Dec. 31, 2030 to Dec. 31, 2047 — stoking the well-known cynical view that there is no such thing as a temporary tax.
The context here is that the state allowed Honolulu to levy a 0.5% surcharge on the state’s GET in 2005,[1] and it was supposed to sunset Dec. 31, 2022. But the 2017 Legislature extended that expiration date to Dec. 31, 2030.[2]
Now, SB1333 proposes to delay the sunset of that sunset to 2047 — 25 years after it was originally set to expire.
A far better choice than what is being proposed in this bill would be to simply allow the county GET surcharges to lapse. Otherwise, what we would be doing is permanently increasing Hawaii’s combined GET rate to 4.5%, despite the statements originally that it would fall back to 4% in 2031.
In addition, the GET is widely recognized as being a regressive tax, which makes the idea of a permanent increase even more objectionable. Rhetoric notwithstanding, a “surcharge” is a tax hike, and a permanent increase in the GET would disproportionately affect Hawaii’s most economically disadvantaged residents.
According to the Institute on Taxation and Economic Policy, Hawaii’s GET falls most heavily on those least able to afford it and takes up an average of 11% of family income for the poorest 20% of earners.[3]
Please reject this “forever temporary tax” and defer SB1333.
Thank you for the opportunity to testify.
Ted Kefalas
Director of strategic campaigns
Grassroot Institute of Hawaii
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[1] James Mak, “The Exorbitant Cost of Collecting Honolulu’s Rail Surcharge Tax,” The Economic Research Organization at the University of Hawai‘i, Feb. 2, 2017.
[2] “Hawaii Gov. Ige signs bill to fund Honolulu’s transit-rail project,” Progressive Railroading, Sept. 7, 2017.
[3] Meg Wiehe, Aiden Davis, Carl Davis, et al., “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States,” Sixth Edition. Institute on Taxation and Economic Policy, October 2018, p.54.
