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TAXWatch: Oh? Can’t We Keep HART’s Funding Sources ‘Pure’?

Recently, there has been fierce debate over Bill 42 before the Honolulu City Council. Here’s the background: In 2007, the City passed Ordinance 07-001, which says that the Honolulu rail project would be funded only with proceeds of the general excise tax surcharge and federal money. “We’ll never touch the real property tax to build rail,” the politicians said at …

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TAXWatch: It’s Real Property Because We Said So!

Today we look at a case now pending in the Hawaii Supreme Court that may give us some insight on county real property taxes and their limits. Once upon a time there were a couple of companies that constructed some large wind turbines on mountain ridges on Maui. The wind farms aren’t cheap. The first one built, on the West …

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TAXWatch: Take-Aways from the ‘Con-Am’ Argument

On October 18, 2018, the Supreme Court of Hawaii held oral argument on a petition by the four counties to invalidate the “Con-Am,” namely the constitutional amendment ballot measure that would allow the State to slap a “surcharge,” essentially an additional property tax, on “investment” real property. We now know that the Court invalidated the ballot measure with an opinion …

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TAXWatch: Do We Really Have a Spending Ceiling?

This week, we look at another provision that was passed by the 1978 Constitutional Convention to assure our fiscal health—and what our lawmakers have done to marginalize it. As we mentioned in June, Hawaii Constitution Article VII, sections 8 and 9 limit general fund expenditures by an “expenditure ceiling.”  It says that the Legislature is to establish a General Fund expenditure ceiling …

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TAXWatch: Whither the General Income Tax Credit?

Those of us who are getting along in years may remember the “general income tax credit,” a line on our state income tax return where we could claim a one-dollar credit. The saga of this credit tells us a little about a bold move undertaken in the 1978 Constitutional Convention and our lawmakers’ reaction, which was to beat it into …

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TAXWatch: Guess Which Agency May Be Forgoing Millions in Federal Dollars?

One article that recently appeared in the Star-Advertiser was titled, “State forgoing millions in federal reimbursements.” The state agency referred to in that article was our Department of Education. We have children from indigent families in our school system. Some of them, especially in special education, can and do benefit when they receive services from health professionals. When that happens, …

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TAXWatch: Guess Which Agency Can Impose State Tax?

Lots of the controversy swirling around the ballot measure seeking to impose a “surcharge” on investment property to support public education involves our Department of Education. The DOE currently receives an appropriation from the State’s General Fund of about $2 billion and is also able to pull from other funding sources such as federal funds. But did you know that …

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TAXWatch: Say It’s a Tax!

The news recently mentioned a lawsuit that the City and County of Honolulu, now joined by the other three counties, has leveled against our state government regarding the HSTA-sponsored constitutional amendment.  The counties, obviously not overjoyed at the prospect of the State slapping a surcharge on their primary source of revenue, want the courts to void the ballot question. They …

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TAXWatch: Taking Exemptions Without Really Knowing

These days, our General Excise Tax contains exemptions and reduced rates that are supposed to reflect commercial reality but often contain leaps of faith. One common example is the wholesale rate. If I sell you a mango that you then resell to someone else, then I need to pay not the 4% or 4.5% retail rate, but the lower 0.5% …

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TAXWatch: Raising Taxes Means Decreasing Prices?

I’ve often heard the argument that taxes on Hawaii real property are too low.  Because the taxes are low, the argument goes, prices are driven sky high, leading to economic pandemonium. But is that really true?  Maybe it’s just a question of semantics. Suppose I agree to sell you a house for $500,000.  But we aren’t able to get our …

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