Senate Minority Leader Sam Slom outlined his fiscal plan for reporters on Friday morning, which includes $500 million in tax relief for working families.
That $500 million, or about $915 per year per family, would be reached by exempting food and medical supplies from the General Excise Tax and increasing Hawaii's personal tax exemption to the federal rate of $3,950 from $1,144.
Slom said the state could bear the hit in light of its $844 million surplus, announced by the governor in his State of the State address earlier this month.
“When the government says it loses revenue because it hasn’t taken money away from individuals or businesses — it’s our money,” Slom said. "They’re not losing anything.”
The Senate’s lone republican said last year 18 states cut taxes, and he hopes Hawaii can do the same this year.
He also proposed exempting business-to-business transactions involving tangible goods from the GET, a practice his budget director said is partly responsible for Hawaii’s high prices.
Additional fiscal measures presented by the Senate's one-man minority caucus include exempting Hawaii residents from the Transient Accommodation Tax to lower the cost of intrastate travel and stay-cations; repealing the state’s inheritance/estate tax; and providing for a minimum tax refund or tax credit to taxpayers when the state has excess revenues.
“We don’t think it’s a question of taking (revenue) away,” Slom said of his fiscal plan. “We think it’s a question of improving our business climate, therefore providing more business more activity and, in the end, more taxes. I mean, it’s always worked in the past — you don’t improve an economy by over taxation, spending and debt; you do improve it by providing for incentives.”
-- Sarah Zoellick