On Tax Increases (SB 791)
By David Y. Ige (2001)

I was one of the eleven members who voted against Senate Bill 791, SD-2. I believe that we have the funds available from existing sources to pay for fair raises for teachers, faculty, and other union members involved in collective bargaining agreements, without having to increase taxes. As a member of the committee on Ways and Means (WAM), I have taken heed to the Committee's warnings that there remain many fiscal uncertainties facing our economy. But I see solutions to these fiscal uncertainties within the Budget, without having to break our promise to the people.

Although supporters claim otherwise, Senate Bill 791, SD-2 is a tax increase. Income tax rates are already in place for years 2000 and 2001. In 1998, the legislature promised the people of Hawaii tax relief, and now it looks as if some in the legislature want to repeal their promise as well as the tax relief.

What I also find greatly disconcerting about Senate Bill 791, SD-2 is the method in which it arrived at Third Reading. There was neither public notice nor a public hearing on the amendments in the second Senate Draft of the bill made by the committee on Ways and Means (WAM). This is simply bad public policy, and I do not support it.

A defining moment has come upon us, and I plan to stand by my decision in 1998 to provide tax relief. It is my intention, by not supporting Senate Bill 791, SD-2, to uphold my promise to the people and encourage the legislature to search for answers within the Budget.

Some Background Information
  • March 1998 – the Department of Business, Economic Development & Tourism in its quarterly report, Economy, reflects the Economic Revitalization Task Force's (ERTF's) recommendations to restructure Hawaii's tax system.
  • May 1998 – the 19th Legislature enacts House Bill 2749, which implements a portion of ERTF's recommendations.
  • Summer 1998 – Governor Ben Cayetano signs House Bill 2749 into law, Act 157. Act 157 attempts to provide tax relief to individuals in an attempt to bolster the economy through consumer spending.
  • March 2001 – the 21st Legislature proposes to repeal section 235-51 of Act 157 that enables the tax relief.
  • March 8, 2001 – Senate Bill 791, SD-2, which repeals the personal income tax reductions for 2000 and 2001 taxable years, narrowly passes Third Reading with a 14-11 vote.