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Monday, September 22, 2014         

ON POLITICS


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House leadership tussle has implications for tax policy

By Richard Borreca

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Watch the organization of the House and Senate carefully if you care about your state taxes.

As I write this, the state House is still threatening to get semi- organized, although it is not yet nailed down.

It might want to hurry up because the Legislature opens tomorrow.

If House Speaker Calvin Say, D-20th (Palolo-St. Louis Heights) remains in charge, it is likely he will keep Rep. Marcus Oshiro, D-39th (Wahiawa-Whitmore Village) as Finance Committee chairman.

For the past two years Say and Oshiro have strenuously lobbied for changes in tax policy and public worker benefits as ways to cut government costs.

Say's ideas center on cutting back worker benefits, including pension and retirement plans. Say has been introducing public worker benefit cutback plans since he was House Finance chairman in 1998, so it is not likely that if he retains his speakership he will lose interest in budget slicing by trimming worker expenses.

Although Say is likely to retain the nominally powerful speakership, his public employee benefit reform package will be controversial and unpopular with the big public unions.

While Say's plan is curling the toes of the rank and file, Oshiro last year startled the business community with a hard-hitting series of cuts in state tax exemptions.

Oshiro went after many of the state's sacred cows by suggesting that the general excise tax exemptions for various nonprofits -- including credit unions, labor unions, nonprofit community associations and others -- be removed and that they pay some tax.

Oshiro's idea has a lot of old-fashioned populist appeal because he is cutting special-interest tax deductions, but it also is politically risky because he would be hurting so many vested interests.

Like Say's bills, Oshiro's did not pass -- but they are expected to be up for consideration again this year if the pair are, as expected, returned to House leadership.

As much as it can be, the state Senate lineup is settled.

Maui Democrat Shan Tsutsui is Senate president. He is a small businessman who owns a children's store, Keiki Time, in Kahului, so he is no fan of more taxes.

But Tsutsui has served on the Ways and Means Committee long enough to appreciate that taxes make government go.

For Tsutsui to vote on a tax-increase bill, he said, he would want some big trade-offs.

The idea of increasing the excise tax and linking it with big tax cuts for local folks has been around since former Gov. Ben Cayetano first proposed it, and Tsutsui says he can see the merit in some version of a tax trade-off bill.

For instance, if the GET were to rise, Tsutsui says he would like to see the GET dropped on all medical services, food and drugs, and perhaps a change in the tax brackets.

Finally, there is the third player in state tax policy: the state administration.

So far Gov. Neil Abercrombie has said little except he will have a tax plan, and it is likely to be explained in his State of the State speech next Monday.

There is no wonder that those viewing all this will feel that Hawaii tax policy is something akin to the fellow who jumped on his horse and rode off in all directions at once.

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Richard Borreca writes on politics every Tuesday, Friday and Sunday. Reach him at rborreca@staradvertiser.com






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