The two top leaders at the Legislature made it clear Wednesday they have serious doubts about Gov. Josh Green’s plans to eliminate the state excise tax on food, impose a new fee on arriving tourists, and legalize marijuana in the upcoming session.

Those three ideas are some of the best-known proposals to emerge from Green’s successful campaign for governor this year, but House Speaker Scott Saiki and Senate President Ron Kouchi both sounded skeptical when asked about each of those initiatives in an online Honolulu Star-Advertiser “Spotlight” appearance.

Green proposed eliminating the excise tax on food and medicine during the campaign as a way to reduce the painfully high cost of living for Hawaii residents. The idea has been a perennial proposal at the Legislature, but never passes in large part because Hawaii’s sweeping excise tax is the state’s largest single source of revenue.

And Saiki raised another concern Wednesday, pointing out that tourists pay some 30% of the excise tax. That means reducing the tax on food would in part benefit visitors.

“That’s a sizable percentage, and the House has always taken the position that if we provide tax cuts like this, that we should target those cuts for those who are the most in need. I don’t believe we should enact a broad based tax cut that disproportionately benefits visitors and high-end taxpayers,” Saiki said. He described the tax cut proposal as “a tough issue.”

Yunji de Nies and Ryan Kalei Tsuji discuss the upcoming legislative session with House Speaker Scott Saiki (bottom left) and Senate President Ron Kouchi (bottom right). Both lawmakers seemed skeptical of some of Gov. Josh Green's best-known proposals.
Yunji de Nies and Ryan Kalei Tsuji discuss the upcoming legislative session with House Speaker Scott Saiki, bottom left, and Senate President Ron Kouchi, bottom right, on Wednesday. Both lawmakers seemed skeptical of some of Gov. Josh Green’s best-known proposals. Screenshot/Honolulu Star-Advertiser/2022

State tax officials have pointed out that food purchases via the federal Supplemental Nutrition Assistance Program — formerly known as food stamps — are already exempt from the state excise tax.

That means most of Hawaii’s poor residents generally don’t pay the excise tax on food, and suggests it would be higher-income residents who would benefit from such a tax cut.

Kouchi said that “I would share the same concerns, the long-term effect.”

The Legislature this year structured the state’s refundable earned income tax credit in a way that most benefits lower-income working families, and “the message from both the House and Senate is we’re trying to get the money into the hands of those most directly impacted,” he said.

“We will be looking for ways to make sure that we can do it, and if it’s not through exempting tax on food and drugs, we will be looking at other mechanisms that we’ve used in the past, and making sure those who are in the most need will get that help,” Kouchi said.

Another well-known Green proposal from the campaign is his plan to impose a “climate impact fee” of about $50 per person on tourists as they enter the state. He has said that would raise $500 million to $600 million per year, and suggested the extra fee would reduce the number of “low end” tourists who come here and help reduce the total number of visitors each year.

But Kouchi said Wednesday there are “potential legal issues about being able to do that.” Those kinds of environmental impact fees are charged by nations, he said, and not individual states such as Hawaii.

Charging the fee at the airports may not be allowed by the federal government, “and so if that’s problematic, then the hotels already have TAT (transient accommodation tax) charges that they have, they have resort fees, they don’t want to tack that onto their bills, so I think there are some real challenges on where would you levy the fee, who would collect it, and how do you disburse it,” Kouchi said.

Saiki added that the Legislature recently authorized additional site-specific destination fees at attractions such as state parks to raise money for protection of natural resources, and “we should give the departments a chance to fully implement that.”

Those kinds of site-specific visitor fees can legally be applied to non-residents without charging residents and the site-specific approach “is something that we really should focus on first,” Saiki said.

On the issue of legalization of marijuana, neither Saiki nor Kouchi seemed particularly enthused. Green supports legalization of marijuana for recreational use, and proponents are planning a legalization push at the Legislature next year.

Saiki said lawmakers will “take a hard look” at the pending report of the Dual Use of Cannabis Task Force under the state Department of Health but reminded listeners that legalization for recreational use comes up every year. Hawaii lawmakers have never yet embraced the idea.

Kouchi said legalizing and taxing recreational marijuana may not produce nearly as much revenue for the state as some proponents have been predicting, which is an issue being studied by the task force.

“I’m not one that’s very excited about passing marijuana legislation, but I’m pragmatic,” he said. “If this is the direction of the (Democratic) caucus, then the bill will go through, if that’s what they say. But I’m not optimistic that we’re going to have everything in place to be able to get a bill passed this year.”

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