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Lawmakers move tax and revenue-generating bills

By Derrick DePledge

LAST UPDATED: 7:53 a.m. HST, Apr 30, 2011


State House and Senate negotiators moved a host of tax and revenue-generating options, hopeful that they have done enough to close a projected $1.3 billion budget deficit over the next two years.

The most significant tool is a bill that would temporarily suspend general excise tax exemptions on nearly two dozen business activities – including tax breaks for contractors, airlines and businesses that sublease — which would bring in about $200 million a year.

The second largest step is a bill that would repeal a state income tax deduction on higher-income taxpayers, cap itemized deductions on higher-income taxpayers, and delay an increase in the standard deduction and personal exemption. The bill would generate $51.8 million a year.

Lawmakers agreed Friday night to cap hotel-room tax revenue that goes to the counties and the Hawaii Tourism Authority, which would bring the state more than $30 million a year.

Negotiators signed off on a bill that would adjust rental car surcharges meant to help finance highways and new rental car facilities at airports and divert some of the money into the state's general fund for one year. The bill would capture about $60 million in fiscal year 2012.

But House and Senate negotiators, working to make a midnight procedural deadline to have bills ready for final votes before the session adjourns on Thursday, got entangled over a pension tax.

State Sen. David Ige (D, Aiea-Pearl City), backed by Senate leaders, drew the line at even a small tax on pension income. State Rep. Marcus Oshiro, (D, Wahiawa), supported by House leaders, refused to drop a pension tax from the bill that contained several other of the tax options.

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