A general excise tax hike has been killed by lawmakers, but businesses and nonprofits still may face a $200 million jump in taxes.A senate committee took a one percent g-e hike out of a bill that still would suspend tax exemptions on many companies and charities.
On Wednesday the public pleaded over taxes. Some were for the proposal, but most against a bill that included raising hundreds of millions of dollars in general excise tax.
“Nobody's budget balances at this point in time, so at the end of the day we'll have to either come up with revenues or cut the budget,” said Sen. David Ige, chairman of the Senate Ways and Means Committee.
By midday Thursday, the prospects of a general excise hike to raise revenue had fizzled after Donovan Delacruz moved to gut the G.E. tax increase from the measure. The hike's advocates say they won't try to revive it.
"I'm not going to propose it, clearly. There are 76 other legislators trying to deal with balancing the budget,” said Ige.
"It was a definite uphill battle for them I think, with the house being opposed as well as the governor indicating he wasn't supportive. It would have been really, really difficult to make it through conference,” said Rep. Blake Oshiro, democrat House Majority Leader.
The bill still stands to be difficult on some businesses and nonprofits that would see their general excise tax exemptions suspended under the surviving version of the bill, which would mean a sudden $191 million tax bill for them over the biennium.
Hawaiian Airlines alone would have to shoulder $25 million a year. They say that could mean job cuts and higher ticket prices.
"Bluntly, Hawaiian is not able to absorb cost increases of this size and so we would have to offset that with reductions in service, possibly pulling back on our growth plans, reductions in workforce and increased fares,” said Keoni Wagner, spokesman for Hawaiian Airlines.
Whether the bill's uphill battle is over remains to be seen.
"Would you like to eat cat food or would you like to eat dog food? Two bad choices, and one bad choice is still on the table,” said Rep. Gene Ward, republican House Minority Leader.
Bills surviving this week head to conference committee where differences between House and Senate versions get worked out.
