Tax expert says potential half-percent increase would affect family finances

Hawaii residents could be facing a general excise tax increase.

A new bill is moving through the state Legislature that would increase the general excise tax on Oahu from 4.7 percent to 5.2 percent. Neighbor islands would be affected as well.

The bill itself proposes a half-percent increase for all residents statewide.

We wanted to know, why is it necessary and how much of a burden would it be for island families?

Tom Yamachika, president of the Tax Foundation of Hawaii, says there are many bills being considered by the State Legislature that could make a significant cut into your budget.

He says residents should be concerned about a proposal that would add another half-percent to the general excise tax, in addition to the one Oahu residents are already paying for rail.

The Tax Foundation estimates that the half-percent tax equals to about $200 per person a year, and that’s for every adult and child. So a family of four with two kids would pay $800 a year.

“It’s going to be a hardship,” said Salt Lake resident Deborah Fortson. “My husband’s retired. I take care of my mom, who is living with me, so I would be the only income at the home.”

“What do you cut back on if that happens? Where does it hurt the most?” KHON2 asked.

“Taking care of my mom,” she said. “There would have to be things that she wouldn’t — I wouldn’t be able to go anywhere. Even though we live in a circle, we live on an island, we still need gas, or any of the necessities that she might need.”

State Sen. Lorraine Inouye, D, Hawaii Island, amended the bill to add that extra-half percent. She says she wants it considered to raise money for the Department of Transportation Highways Division, in case bills relating to the gas tax don’t move forward.

“If all other measures (fail) with regards to increasing the gas tax, as an example, then at least it’s protected in another measure,” she said.

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