State lawmakers want to hear from the public on proposals to raise the general excise tax or temporarily suspend the tax on certain business activities.
Either or both proposals, combined with various spending cuts, may be needed by lawmakers to close a $1.3 billion budget deficit.
Both proposals will be included in a bill scheduled to be taken up by the Senate Ways and Means Committee on Wednesday.
“We’re going to see what the public says and get some comments and whatever suggestions we can and try to make the decision,” said Ways and Means Chairman Sen. David Ige (D, Aiea-Pearl City). “We haven’t decided at this point.”
Gov. Neil Abercrombie told senators on Wednesday he does not support a general excise tax increase. He indicated he would consider a House proposal to temporarily suspend the GET exemptions on certain business activities, which is unpopular among some in the Senate.
The Senate Economic Development and Technology Committee held last week a bill that would have eliminated GET exemptions on several business activities and imposed 2 percent, 3 percent and 4 percent general excise taxes on those activities over the next few years. Several business interests opposed the idea, telling lawmakers it would damage their ability to recover from the recession.
The GET exemption would be removed from subcontractor and sublease deductions, gross receipts from rental or leasing of aircraft or aircraft engines used for interstate transport, amounts received for aircraft service and maintenance, and amounts received from loading or unloading ships and tugboat services.
“If we have to choose, I would prefer going with the House position and the governor’s position,” said Sen. Donovan Dela Cruz (D, Kaena-Wahiawa-Pupukea), a member of the Ways and Means Committee.
“We need big picture ideas,” he added. “What industries are we going to grow? How are we going to grow them so we can get more jobs in Hawaii?”
Sen. Pohai Ryan, another committee member, said she would support increasing the GET under certain conditions and only as a last resort. Ryan (D, Lanikai-Waimanalo) called the other option tough, “because we have to support businesses to create work.”
Ways and Means member Sen. Will Espero (D, Honouliuli-Ewa Beach) said he supported keeping both measures alive for further discussion, while the Senate’s lone Republican argued neither option should advance.
“What we have to do is significantly cut this government,” said Sen. Sam Slom (R, Diamond Head-Hawaii Kai), who sits on all Senate committees. “It’s not a question of where we’re going to find additional revenue.
“We’ve got to put a rein on the way that government is operating right now. Period.”