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August 2005

October 2005

President's Message
Affordable Shelter Committee Meets Sept. 12 (Jackie Parnell)
Kakaako Development Progress (Jackie Parnell)
Will Honolulu Get Federal Funding? (Pearl Johnson)
Report on LWV National Council (Malia Schwartz)
How Will Tax Increase Affect Honolulu? (Charles Carole)

How Will Tax Increase Affect Honolulu?

The City Council has passed a 1/2% surcharge to the State 4% excise tax and the Mayor plans to sign the surcharge bill on August 23rd. The League spoke against this surcharge because it a regressive tax. The 1/2% surcharge would reduce the amount of money that the lower-income people could spend on essential things, such as food, medical needs and other necessities. Higher income people would have sufficient income to pay the surcharge without reducing the quality of living.

The University of Hawaii Center on the Family recent study pointed out that the poorest fifth of the state's population lost 7% of their income since the 1970s while the richest fifth saw a 31% increase in their income. The study also shows that the top-earning fifth of the state's population earns 60% of the state's personal income.

It is often predicted that the excise surcharge tax would collect $150 million in 2007. However, what is never discussed is how much that tax would collect in the following fourteen years. In truth, the surcharge amount would increase yearly by the Honolulu inflation rate. The 2004 Honolulu inflation rate was 3.3%. The Honolulu inflation rate for the first 6 months of 2005 was 3.1%. Projecting from these rates, in the fifteenth year, the tax could be $220 to 240 million, which would drain even more money from the lower-income population.

Jim Dator, University of Hawaii futurist, has made several future scenarios for Hawaii. One of these scenarios was that Hawaii would have two social classes: the poor and the rich. This scenario is coming true with the help of our governments. The League must keep fighting to prevent this scenario from happening.

The League has suggested a City income tax with the tax rate based on income to shift the tax burden to the higher income people.

Charles Carole
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