How Much Hawaii Legislature’s Tax Hikes Will Cost You
Hawaii taxpayers are on the hook for about $600 million in new tax revenue to help pay for the state’s new two-year budget.
Lawmakers approved five key tax bills Friday night that combined with cuts to state departments, labor savings and raiding of special funds will balance the state’s budget. The budget calls for spending about $11 billion in each of the next two fiscal years.
Unlike Gov. Neil Abercrombie’s budget plan, lawmakers have shifted the bulk of the tax burden to businesses by eliminating GET exemptions for nearly two dozen business activities. The move is expected to generate about $175 million a year, or half the new revenues.
Abercrombie’s tax proposals had included tax hikes that would have hit Hawaii’s elderly population by taxing pension income and eliminating Medicare Part B reimbursements for government retirees. His plan also called for a new soda tax, increasing the alcohol tax, hiking vehicle taxes and phasing out the state income tax deduction.
Legislators killed the pension tax and Medicare bills. They also rejected the soda and alcohol tax measures. They did adopt a bill that repeals the state income tax deduction and caps itemized deductions, but only for higher income earners.