Hawaii County residents and visitors will have to dig a few more pennies out of their pockets for goods and services starting Jan. 1 after the County Council on Wednesday passed a half-cent general excise tax surcharge, replacing the one-quarter percent approved last year.
The tax, which expires in 2030, will add an estimated $50 million annually to the county budget, compared to about $25 million now collected.
With no discussion, the council approved the tax hike 7-0, with Kohala Councilman Tim Richards and Hamakua Councilwoman Valerie Poindexter absent.
Mayor Harry Kim said the administration will likely use the new money for police, parks maintenance and homeless services. The council action means the mayor will be able to add about $12 million to the $573.5 million 2019-20 budget he proposed March 1. His final proposed budget is due by May 5.
Council Chairman Aaron Chung said the issue has been discussed at length.
The county’s one-half cent GET is in addition to the state’s 4-cent tax. The county share would add 52 cents to a $100 bag of groceries, with the county share costing $100 annually to a household spending $20,000 on eligible expenses or $250 for those spending $50,000.
The tax is charged on almost everything, except federal food assistance programs such as SNAP (Supplemental Nutrition Assistance Program) food stamps and the WIC (Women, Infants and Children) program, prescription drugs and prosthetic devices. It’s estimated tourists pick up 25 percent to 35 percent of the tax.
About a dozen people testified during a public hearing last month, with most opposed to the increase. Testifiers cited the cost of living, their personal financial impacts, uncertainty about what the additional revenue would be used for and skepticism that the county administration has really cut expenses as reasons for their opposition.
Those favoring the increase say last year’s volcanic eruption and natural disasters stressed county coffers and more revenue must be raised to catch up.
