Tax Analysts Reports on Gov. Abercrombie’s Comments on New Tax Proposals in His State of the State Address

Hawaii Gov. Neil Abercrombie (D) in his State of the State address 2013 STT 15-6: State Announcements and News Releases January 22 called for some new revenue initiatives, including a 10-cent fee on single-use checkout bags and an increase in the conveyance tax rate on all transfers of property with a value of $2 million or more.

The governor estimates that the 10-cent fee would generate more than $15 million, and he would direct the collections to the state’s natural area reserve fund.

The fee on bags was discussed last year but was killed as nearly all the counties have adopted ordinances banning the use of plastic bags.

The governor believes raising the conveyance tax would bring in another $10 million for watershed protection.

Abercrombie urged lawmakers to return the proceeds of the state’s barrel tax (which is imposed on each barrel of imported petroleum) to programs that will ensure energy sustainability and food security. Lawmakers raised the barrel tax by a dollar a few years ago and designated only a portion of the proceeds for energy sustainability and food security programs, taking the rest into the state general fund to help with a budget shortfall.

The governor asked lawmakers to work with the Department of Taxation to find a reasonable accommodation on the state’s energy tax credits. He also asked lawmakers to use general funds and bond proceeds to acquire new technology for the state’s information system and to modernize the department’s system for pursuing delinquent taxpayers.

Citing the improving economic and fiscal health of the state, Abercrombie called on lawmakers to begin paying down the state’s unfunded liabilities for the public employees’ pension and health systems — estimated to top more than $22 billion.

The rosier financial picture also allowed the governor to call on lawmakers to restore the funds that had been taken from the state’s hurricane relief fund and the state rainy day fund in past years to help balance the state general fund budget.

Lowell L. Kalapa, Honolulu

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