Former U.S. Rep. Neil Abercrombie and former Honolulu Mayor Mufi Hannemann, the two leading Democratic candidates for governor, said yesterday that they would not raise the general excise tax to help stabilize the state’s budget.
Several public-sector labor unions and social-service providers have urged state House and Senate leaders to consider a small, temporary increase in the general excise tax to avert further state budget cuts, furloughs and layoffs. But lawmakers have declined, citing the regressive nature of the tax and the potential for higher taxes to slow the state’s economic recovery.
The general excise tax is the largest source of state revenue.
"The prospect of raising the GET has got to be off the table initially because we have no idea how deep our problems are," Hannemann said at a luncheon forum sponsored by the Chamber of Commerce of Hawaii at the Plaza Club. "And I think to foist a tax increase on you at this time is not what we should do."
Hannemann said he would have a better understanding of the state’s budget situation after an audit that he would conduct if elected. He said he would use the audit to identify waste and inefficiency and help prioritize future tax and spending decisions.
"The mayor indicated that he’d be against it initially. I’m against raising the GET tax, without equivocation," Abercrombie said. "You swim in the water you’re in."
The one-hour forum was sponsored by the chamber and other business groups and involved questions on agriculture, the state’s environmental review law, partnerships with the military, health-care and sick-leave mandates, and regulatory and tax issues. The forum was moderated by the chamber’s Bruce Coppa.
Hannemann said he would work to reduce the regulatory burden on small businesses, such as by streamlining the permit process.
"We can’t give you tax relief right away because the state is in deep kim chee," he said. "We have to get all our revenues together."
Abercrombie said business should "start quaking" if Hannemann brings the same approach to permitting as he did at Honolulu Hale, where homeowners and contractors have complained about frustrating delays.
"This is the kind of management experience that the mayor says he’s going to take to the state level," he said.
Hannemann described himself as more friendly to business than Abercrombie. "The proof in the poi is you have to be a friend of the Chamber of Commerce," he said. "You can’t just stand before you today and promise that you’re going to do things."
The former mayor said Abercrombie has a lifetime score from the U.S. Chamber of Commerce of voting with business just 30 percent of the time in Congress.
"That high?" cracked Abercrombie, who is known for his advocacy for labor.
The two candidates also criticized each other for raising taxes and fees. "When he was in the Congress there wasn’t a tax increase that he didn’t like or vote for, so look at his history," said Hannemann, adding that Abercrombie has not said how he would pay for new state programs outlined in his "A New Day in Hawaii" plan.
Abercrombie said the city’s settlement with the federal government on wastewater treatment will lead to higher sewer fees for residents. "Of course, the mayor knows all about taxes being raised because that’s exactly what he’s done. The sewer fees are going to go up. You’re going to pay it for 25 years," he said.
The former congressman also said that his ideas would not cost any additional state revenue. "I’ll make this government work with the money that we have," he said.