You can add a possible income tax increase for wealthier residents and perhaps a bump in the state tax levy on imported oil to the list of tax increases that Gov. David Ige is considering to cope with the state budget shortfall.

In a House Finance Committee hearing on Tuesday, Ige Chief of Staff Linda Chu Takayama was asked which tax increases the administration might ask lawmakers to approve in the legislative session that begins Jan. 20.

Takayama gave a roundabout answer, saying she did not have a complete list of the tax proposals with her.

“The tax increases, I can say, are not increases against ordinary individuals. With the possible exception of a tax on the upper-end wealthy folks, there are no tax increases that I am aware of that would be applied to folks that are normal and lower class,” she said.

The House gave preliminary approval last year to a measure to increase state income taxes on Hawaii’s wealthiest residents, but the bill was never heard in the Senate.

Linda Chu Takeyama Council on Revenues Meeting.
Gov. David Ige’s Chief of Staff Linda Chu Takayama, seen here at a meeting in 2019, said this week that the administration is considering an increase in income taxes on “upper-end wealthy folks,” and possibly a barrel tax on imported oil. Cory Lum/Civil Beat

The administration is also considering reducing or suspending state tax credits and tax exemptions, Takayama said, which is a strategy the state used to boost tax collections and help balance the budget when the Great Recession caused the last major budget crisis in 2009 and 2010.

Another possibility is the state might impose a “barrel tax” on imported oil, she said.

The state already has a so-called “barrel tax” on imported oil formally known as the Environmental Response, Energy, and Food Security Tax. That tax is used to fund an environmental cleanup special fund and other state programs, as well as provide revenue to the state general fund.

It was unclear whether Takayama meant the administration is considering an increase on the existing tax or an entirely new levy. She promised to draft a memo giving lawmakers a more complete description of what tax increases or changes the administration is considering.

State Finance Director Craig Hirai said last week the Ige administration “possibly” will propose a new “carbon tax” on the use of fossil fuels, and may also propose a new “sugar tax.”

He added that “some other health care taxes” may be part of the administration package as a way of providing additional state funds to qualify for federal matching funds. He did not elaborate on that proposal.

Whatever tax proposals the administration finally pursues would be submitted to lawmakers as bills later this month, some of whom have expressed doubts about raising taxes at a time when many local residents and businesses are already struggling to pay their bills.

House Speaker Scott Saiki has already said the state budget shortfall is too large to be plugged by tax increases, arguing that the state needs to cut spending.

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