Report Title:

Taxation, Remove Income Tax, and Raise GET to 8%

RESOLUTION

WHEREAS, the economic burden that is often referred to as the "paradise tax" falls heavily on state residents; and

WHEREAS, our current system of taxation that includes both a general excise tax as well as an income tax places Hawaii residents among the most heavily taxed citizens in the nation; and

WHEREAS, alternative suggestions have been proposed to provide a different system of taxation that would distribute the tax burden more equitably; and

WHEREAS, for example, H.B. No. 283 proposed renovation of our tax system by eliminating the individual income tax and raising the general excise tax to six per cent, with an exemption of food and health care services from the tax; and

WHEREAS, the estimated total gain for fiscal year 2002 under this tax scheme is over half a million dollars; and

WHEREAS, there was considerable interest in the tax scheme proposed in H.B. No. 283, but the effective date of July 1, 2001, did not give the Department of Taxation sufficient time to modify its current computer system and forms; and

WHEREAS, further research of the impact of such a change in the tax system on Hawaii's economy is needed; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-first Legislature of the State of Hawaii, Regular Session of 2001, the Senate concurring, that the Department of Taxation is requested to study the tax scheme proposed in H.B. No. 283, Regular Session of 2001, and the projected tax revenue levels for this scheme, as well as the impact on residents by income level; and

BE IT FURTHER RESOLVED that the Department of Taxation is requested to submit findings and recommendations to the Legislature not later than twenty days prior to the convening of the Regular Session of 2002; and

BE IT FURTHER RESOLVED that a certified copy of this Concurrent Resolution be transmitted to the Director of Taxation.