Hawaii's Rail Tax Proposal

I am sitting here, scratching my head. I do this often when I read the news but this one is a local issue. The State of Hawaii is looking to build a fixed rail system to help ease the traffic problems that it is facing. Gridlock, especially prior to 8am or after 3:30pm, is an every day occurrence.

The fixed rail system would cost approximately $26 Billion to build and another $20+ Million to maintain. The State does not currently have the money. To help finance this fixed rail system, the State legislature has proposed an increase in the General Excise Tax from 4% to 5%.

Having moved here from the "great state of Tennessee" where the tax on food items is 8% and the tax on non-food items is 9.5%, 5% is NOTHING. The estimate is that the 1% increase in General Excise Tax will cost a family of 4 about $900 per year.

Now, $900 per year is nothing to sneeze at. BUT, I have a solution...one that has yet to be mentioned. But let me preface it a bit...

Tourism is one of the LARGEST contributors to the economy in Hawaii. Millions and millions of tourists visit the islands each year. WHY has this asset not been tapped in terms of tax revenue??? How hard would it be to hike the General Excise Tax up to, say 8% and then offer a state tax refund to all island residents? How hard is that and WHY has this idea not been brought forth before??

An increase in the General Excise Tax will not hurt tourism. Heck, you could hike the GET up to 10% and I seriously doubt you would see even a blip in the tourism statistics. Why burden the residents of the islands when you have a vastly untapped resource right in front of you?

I'm not saying I am for the rail tax. Actually, I think a lot more could be done to address the traffic/gridlock situation before sinking BILLIONS of dollars into a rail system. I'll post links below that will give you access to some of the arguments I have found for and against the rail system.

Hawaii has many issues that need to be addressed - roads, schools, municipal facilities, etc. Why not make the tourism industry work harder for the residents of the islands?


No New Taxes Hawaii

Alliance For Traffic Improvement

Grassroot Institute of Hawaii - "What's Wrong With Rail" article

Vote Hawaii.com's articles on Mass Transit

Those of you who understand economics (or tax law...) a little better than I (and that is most, if not ALL, of you...), please let me know if my idea is feasible.


- hfs

1 comment:

Haole Girl said...

I have heard that there would be a refund of the GET for locals, but even then there are problems. Why burden local businesses and the state government with the added expense of accounting for and refunding the tax? Especially when it's for something that is doomed to fail anyway? (This is where I add my two cents....)

I honestly don't think a rail system will work on Oahu. Look at The Bus - how many nearly-empty buses do you see on the roads? Most people don't want to use public transportation. Even those who support the rail system say they won't use it, but hope their neighbors will. I know I wouldn't use it. I like the convenience of having my car at my disposal. The traffic doesn't bother me much, unless there is an accident.

The other thing that bothers me about the GET increase is that they haven't really come up with a plan for the rail system. Maybe if they had a plan and knew it would cost $XX, they would find more support.

If they want to fund public transportation (or education or police services, etc.) with a tax on tourists, they should add an additional fee to plane tickets, hotel stays, and other tourist activities.

(Off my soapbox....)


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