Hawaii's Tax Revenue Slips In Recent Fiscal Year

Despite hopes that this would be a year of recovery, the state of Hawaii saw a drop in tax revenue this past fiscal year. Some officials believe this may be an inaccurate calculation, because some tax returns were withheld until the new fiscal year, so not all data has been collected.

According to the Associated Press individual income tax collections rose 14.5 percent in the fiscal year that ended June 30, compared with the same period a year earlier. Similarly, corporate income levy receipts increased 10.2 percent.

Moreover, the state's hotel tax collections rose 6.4 percent in fiscal year 2010.

At the same time, however, general excise tax receipts fell 4.4 percent, an indicator that consumer spending is still lagging.

Collectively, the state's general fund revenue dropped 0.5 percent for the fiscal year, the tax department reported.

The agency cautioned, though, that some tax refunds that normally would have been paid by June 30 were held back until the start of the new fiscal year, a moneysaving move instituted by Gov. Linda Lingle.

Hawaii Governor Vetoes Oil Tax and Other Bills

From BusinessWeek.com:

Hawaii Gov. Linda Lingle is vetoing measures raising taxes on oil, estates and traffic abstracts.

Lingle said in her veto message of the $22 million oil tax Tuesday that it would affect every resident by increasing the amount they pay for electricity, gas, shipping, retail goods, food and propane.

Traffic abstract fees would increase in cost from $7 to $20, generating $6.5 million.

The estate tax would raise $10 million next year.

The Republican governor also vetoed a measure preventing the closure of 31 welfare eligibility offices statewide and consolidating them into two processing centers in Honolulu and Hilo.

The Legislature plans to attempt veto overrides Thursday.

Lingle signed a cigarette tax hike of 1 penny per stick, bringing in $11 million.

Hawaiians Rally For and Against Tax Hike Proposal

In response to a proposal for an increase in Hawaii’s excise tax, hundreds of citizens gathered at the States capital to protest. Hawaii is already one of the most taxed states in the country, so it is no surprise that local taxpayers would strongly oppose any increases. The New York Times posted a new article about the protest; you can find a snippet of their piece below.

More than 200 people gathered at the state capitol to ask lawmakers for a 1-percentage point increase in the general excise tax imposed on goods and services. The tax, known as GET, is currently 4.5 percent on Oahu and 4 percent elsewhere in Hawaii.

They waved colored signs saying ''GET'' and urged lawmakers not to eliminate jobs and services.

''The cuts are too deep. They are damaging the economy,'' the Rev. Bob Nakata, a Methodist minister, told the crowd. ''It's not just the bleeding hearts that are saying this needs to be done.''

Hawaii's money troubles have resulted in less government support for public schools, child protective services, mental health, social service providers and agriculture inspectors. Hundreds of public employees were laid off, and the rest are taking pay cuts through furloughs.

Continue reading at NY Times.com…

Some States Delaying Tax Refund Payments

From CBS News.com:

Some states suffering severe, recession-induced budget problems are holding off on paying tax refunds to individuals and businesses. North Carolina, Hawaii and Alabama are already doing it and others, such as New York and Kansas, might.

The states are holding or may hold onto your money as long as they can because they need to use it for other purposes, tax expert and attorney Barbara Weltman told "Early Show" Saturday Edition" co-anchor Chris Wragge.

You'll eventually get your refund, but when depends on where you live, she explained. Laws differ from state-to-state, but most states have to issue a check (or direct deposit) within 45 days from April 15 or the date the return was filed, whichever is later. So, if you filed your return in February, the refund isn't due until 45 days after April 15. Some states have even longer — up to 90 days — to issue the refunds without having to pay interest.

Weltman says she sees this becoming a long-term problem because, even if the economy recovers, many states will have huge leftover budget gaps. "I think the best strategy for tax payers is to avoid the need to get a refund — which is really just an interest-free loan you've made to the government," she observed.

Hawaii's Version of Sales Tax Hides Costs

For those of you who follow me on Twitter, you may already know that I just got back from a vacation in Hawaii last week. Which is why I was surprised to see that my home away from home was in the news this morning for their sales taxes that are likely to increase.

Currently, Hawaii’s sales tax on services is around 5%, however there are additional taxes on items that arrive by cargo ship. Since many items are shipped to the island, the actual tax paid on most products is significantly higher. Additionally, the state’s government is hoping to increase the standard 5% sales tax to a staggering 11-17%. Unfortunately, it seems to me that this drastic increase would hurt the massive tourism industry and thus harm the state’s economy more than it would help.

"We cannot tax ourselves out of this economic situation," said Carol Pregill, president of Retail Merchants of Hawaii. "When you increase costs to a retailer, the costs have to be passed on to the consumer."

According to the Associated Press, Hawaii lawmakers will consider legislation in January that would increase the general excise tax by 1 percentage point and exempt food and medicine. Currently, food and non-prescription medicine are among the items that are taxed.

The bill, which was estimated to raise $200 million annually for education, passed the state Senate this year and is now pending before the House. It faces hurdles because of business opposition and politicians' fear of raising taxes in an election year.

The excise tax pays for nearly half the state's budget, and tourist spending accounts for about one-fifth of total excise tax collections.

The Aloha State is already one of the most taxed states in the nation, but labor union leaders have said a tax increase could save government jobs and help students, whose school year was cut by 17 days annually due to budget cuts.

"People have this perception that we have only a 4 percent tax, and they don't realize we're already on an apples-to-apples basis one of the highest tax states," said Ronald Heller, a tax attorney and former member of the state Tax Review Commission.

Hawaii Cuts Payments to the Temporarily Disabled

Like many other States in the country, Hawaii has been trying to make budget cuts where they can. However, their latest cut of payments to the temporarily disabled has thousands of Hawaiians in an outrage. Several prominent local authorities, such as Senator Suzanne Chun, are speaking out against the cuts saying they will leave many helpless, homeless, and hopeless. You can find the clip of an article discussing this recent development courtesy of the Associated Press below.

Right when more people need welfare, they're getting less from Hawaii's government.

Monthly payments to poor, temporarily disabled people fell by one-third this week, from $450 to $300, because more people are drawing benefits from the same pool of money.

State lawmakers met at the Hawaii Capitol on Wednesday to try and find more money for the program, and they questioned how government could shortchange these 5,055 people when they may have no other income.

"That money won't cover the rent anymore, so many of them will go homeless," said Sen. Suzanne Chun Oakland, D-Kalihi-Liliha.

This money, called general assistance, goes to people without dependent children who are unable to work because of a temporary disability. To qualify, they must have little or no income and can't get other federal assistance.

"What will happen in our aloha state to those who are most needy?" asked Alex Santiago, executive director of a group of nonprofits called PHOCUSED, which stands for Protecting Hawaii's Ohana, Children, Underserved, Elderly and Disabled. "This is their last hope. There has to be an alternative."

After Call From Senator's Office, Small Hawaii Bank Got U.S. Aid

Although numerous financial institutions have already begun repaying money they were loaned by the federal government, a new report has surfaced questioning the aid that was provided to a small Hawaiian bank. Check out the following article on the developing story via the Washington Post.

Sen. Daniel K. Inouye's staff contacted federal regulators last fall to ask about the bailout application of an ailing Hawaii bank that he had helped to establish and where he has invested the bulk of his personal wealth.

The bank, Central Pacific Financial, was an unlikely candidate for a program designed by the Treasury Department to bolster healthy banks. The firm's losses were depleting its capital reserves. Its primary regulator, the Federal Deposit Insurance Corp., already had decided that it didn't meet the criteria for receiving a favorable recommendation and had forwarded the application to a council that reviewed marginal cases, according to agency documents.

Two weeks after the inquiry from Inouye's office, Central Pacific announced that the Treasury would inject $135 million.

Many lawmakers have worked to help home-state banks get federal money since the Treasury announced in October that it would invest up to $250 billion in healthy financial firms. But the Inouye inquiry stands apart because of the senator's ties to Central Pacific. While at least 33 senators own shares in banks that got federal aid, a review of financial disclosures and records obtained from regulatory agencies shows no other instance of the office of a senator intervening on behalf of a bank in which he owned shares.

Inouye (D-Hawaii) declined a request for an interview but acknowledged in a statement that an aide had called the FDIC to ask about Central Pacific's application. Inouye said he was not attempting to influence the outcome. The statement did not address Inouye's personal role in the inquiry, including whether he directed the aide to make the call or knew at the time that it had been made.

Even if Inouye were directly involved, it would not violate the rules the Senate sets for itself, experts said.

Continue reading here.

Hawaii Gov Vetoes Tax Hikes on High Income Earners

According to the Associated Press, Hawaii’s Governor Linda Lingle has vetoed the legislature’s plan to increase taxes on high-income earners, and tourists. Over 400 business leaders and tax protestors reportedly gathered at the Capitol to support Lingle’s decision.

"They can't tax their way to prosperity. They can't tax their way out of this economic crisis," Lingle told the applauding crowd. "The only thing that gets us out of this crisis is more visitors coming, more homes being built, more jobs being created."

Minutes later, Lingle used a stamp imprinting the word "veto" on each of the bills and held them up for the audience to see.

But Democrats, who hold nearly 90 percent majorities in both houses, have already extended this year's legislative session until Friday specifically so they can attempt the overrides, which would take two-thirds majorities in the House and Senate.

They argued that tax increase are needed to balance the state budget, and they complained that Lingle hadn't suggested realistic alternatives.

"If it's not her way, it's the highway," said Speaker of the House Calvin Say, D-St. Louis Heights-Wilhelmina Rise. "I'm just a little disappointed in having this type of promotional public relations get-together at this point in time."

Both Say and Senate President Colleen Hanabusa said they have the votes to override Lingle.

Top 10 Places to Visit in Hawaii

Over the past few weeks leading up to the election, I have been extremely busy doing media appearances about the candidate’s tax policies. Combined with the October filing extension, and a busy franchise-selling season, it has made for a very hectic few months. Fortunately, things should be slowing down over the next few weeks and I should be able to visit one of my favorite places in the world – Hawaii. As much as I love to go to the islands, I really love talking about them and telling those who are just about to make the trek on where they must go. So, below, please find my list of the top 10 places to visit in Hawaii.

1. Lanikai Beach

Translated into English Lanikai means "heavenly sea," which is exactly what it is. Locals and visitors alike marvel at the picture perfect white sandy beaches and clear turquoise waters. The beach is perfect for photography, swimming, canoeing, kayaking, sailing, or just relaxing and enjoying the magnificent view.

2. Hilo

Hilo is a coastal Hawaiian town with something for everyone. This town features multiple museums, a beautiful historic theatre, and downtown area filled with shops and attractions. The area also has dazzling waterfalls, and the only United States zoo situated within an actual rainforest (the Pana'ewa Rainforest Zoo).

3. Hawaii Volcanoes National Park

The Hawaii Volcanoes National Park, situated on Big Island, is one of the most visited spot in the entire state of Hawaii. It has trails for hiking, beautiful sights to photograph, and two record holding volcanoes. Kilauea is the world’s most active volcano and Mauna Loa is the world’s largest volcano.

4. Kilauea National Wildlife Refuge

In a comfortable 203 acres of land on the North shore of Kilauea, the Kilauea National wildlife refuge is the place to go when you want to see and learn about Hawaii's exotic wildlife. You might see Hawaii’s state bird (the nene), or even catch a glimpse of a humpback whale off the shore.

5. Molokini

The Molokini island is widely known for having the clearest waters in Hawaii, and offers from 80 to 200 feet of crystal clear waters. This also makes Molokini the location for Hawaii's best and most beautiful snorkeling. You can either rent a boat to take you further out, or you can just snorkel off the coast. Either way you are likely to witness a beautiful display of sea life.

6. Waimea Canyon

Mark Twain once called this beautiful canyon in Koke's State Park the "Grand Canyon of the Pacific". Over 3,600 feet depth, a mile wide, and 10 miles long, this canyon is both inspiring and stunning in its mass and beauty. Besides the obvious size, the canyon also has brilliantly colored inner walls that play in the sunlight creating a truly spectacular view.

7. Waikiki

With beautiful beaches, waterfalls, and trails, Waikiki offers all the grander of nature that other Hawaiian islands boast. It also has great shopping opportunities including fine art, custom jewelry, designer clothing, and local music. Waikiki is the perfect place to find souvenirs for your friends back home, or to purchase beautiful Hawaiian décor for yourself.

8. Gardens of Kauai

The island of Kauai, known as the garden island, will leave you breathless from the moment you set eyes on it. Hundreds of flowers, trees, streams and water falls will all catch your attention simultaneously, making the visit a true experience of the beauty and spirit of Hawaii.

9. Haleakala

Haleakala is not only one of the largest mountains in the world, but it is also a massive dormant volcano. Seen from miles away, Haleakala is hard to miss, and even harder to look away from. Many locals suggest taking a sunset bike ride, or power walk, down the mountain for a healthy and stunning evening activity.

10. Polynesian Cultural Center

It should be no surprise that the Polynesian Cultural Center makes the list. Every visitor of Hawaii should visit this culture-rich center to not only learn about the island and local inhabitants, but the center also hosts one of most authentic luaus in Hawaii.

Latest Good Reads

God, patriotism and taxes.

Hawaii governor may cut high-tech tax credits.

McCain health plan built on tax credit.

2009 Tannenwald tax writing competition.

Why have the government bailouts involved only a 79.9% equity position?

Six figure-salary - how to gain it?

Risk premiums with a greed tax?

Movers and shakers: real estate.

Top 10 Things to do in Hawaii

As some of you may already know, I “heart” Hawaii. However, like most other people working in the tax industry I have not been able to get away since tax season begun. So to help all the tax professionals and accounts that are planning their post-tax season vacation, I compiled the following list of the top 10 things to do in Hawaii.

However, just because you do not work in the tax industry do not think this article does not apply to you. May is just a few days away, and that means the IRS is going to begin sending economic stimulus checks shortly. If you are wondering what to do with this “free money,” or if you have not yet spent your tax refund, then consider taking a relaxing vacation to one of the most relaxing places in the world.

1. Go Surfing
It is probably no surprise to anyone who has seen my Halloween costume that I love surfing! Hawaii is the perfect place to surf as all of the islands get decent waves and some can be as large as 30 feet.

2. Relax on a Beach
Hawaii is known around the world for it’s beautiful sandy beaches and sapphire water. Although some of the beaches may get crowded during peak seasons, if you do a little hunting then you can probably find a quite place to relax on the beach.

3. Attend a Polynesian Luau
No trip to Hawaii is complete without attending an authentic Polynesian luau. Even if you do not like kālua pork, a luau is still an exciting experience as they often feature music and dancing in addition to a wide variety of authentic foods.

4. Go Snorkeling
When planning your trip to Hawaii, make sure you bring your snorkel and fins! Molokini is considered the most popular snorkeling site in Hawaii as it has clear water with swarms of beautiful fish. However, there are dozens of other good snorkeling sites if your prefer something more exclusive.

5. Play Golf
Hawaii is known all over the world for their top-notch golf courses. There are nearly 100 different courses on the Hawaiian Islands, with locations ranging from deep in the rainforest to coral sea cliffs.

6. Go Volcano Watching
The Hawaiian Islands are filled with both dormant and active volcanoes that are beautiful see and exciting to visit. The Volcanoes National Park is located on the Big Island and features the most active volcanoes and dozens of tour opportunities.

7. Take a Helicopter Tour
By taking a helicopter tour of one of the islands you will be able to experience it in an all-new way, from hundreds of feet above. You will be overwhelmed by the beautiful the scenery is and how much of the island you can see in a relatively short amount of time.

8. Visit Pearl Harbor
Honoring the lives of those who were lost during the attack on Pearl Harbor is a must for any one who visits the Hawaiian Islands. You can view the USS Arizona in her final resting place by visiting the museum and monument that allows you to look through the glass floor to view the sunken ship.

9. Dolphin Convocation
During the first week of May each year, large amounts of dolphins gather near Oahu Island, swimming in a gigantic wheel or spiral pattern. No one knows exactly why this happens. You can join Hawaiian marine biologists this spring as they venture out to observe and research this strange phenomenon.

10. Take a Bike Ride
There are plenty of good bike trails throughout the Hawaiian Islands and places you can easily rent a bike for a few hours. But always remember to pack ample water and diluted juices as the heat and physical activity can easily dehydrate the novice biker.

For more information, check out Go Hawaii.com.

Hawaii economy stuck in fairly decent rut

According to the Honolulu Observer, Hawaii has been suffering slow economic growth, but it has not altogether stopped their ten-year economic expansion. A Weakening US economy and high-energy prices have contributed to the relatively slow growth over the past year.

"We do not yet see an end to the current long economic expansion," said UH economist Carl Bonham. The outlook "is a little bit weaker, but not much. The tone of the report is a little more pessimistic."

Tourism and construction are expected to remain stable next year, which could translate into continued income and job growth and low unemployment, though at less favorable levels than in recent years. So far, Hawaii is expected to sidestep a US real estate slowdown that has hobbled home prices in many Mainland markets.

Slower growth also means Honolulu residents are expecting to get relief from rising prices. Honolulu's inflation rate is expected to drop from 5 percent this year to 3.8 percent next year. Honolulu's inflation rate hit a 15-year high of 5.8 percent in 2006 because of booming real estate prices.

Disney Planning New Resort in Hawaii

According to Radio New Zealand, the Walt Disney Company has announced plans to build a new resort on the Hawaiian Island of Oahu scheduled to open sometime in 2011. Disney has purchased over 21 acres of oceanfront property, where they plan to build a resort set to include 800 hotel rooms and villas. This new Hawaiian resort will help expand Disney’s Vacation Club, their new time share business.

Hawaii’s Jobless Rate Up Last Month

According to Biz Journals, last month Hawaii has a jobless rate of 2.6%. The rate is one of the lowest in the nation, but it’s up from only 2.3% one year ago. The increase has prompted the Labor Department to include Hawaii among the states with "statistically significant" changes in the jobs picture. Nationally, the unemployment rate was 4.6 percent.

Hawaii Tourism Japan Markets Smoking In Japan

As part of a campaign to encourage Japanese smokers to visit the Hawaiian Islands, Hawaii Tourism Japan has begun marketing the phrase "Smoking With Aloha," along with 40,000 free ashtrays with a flower logo. The new plan is part of Hawaii Tourism Japan’s effort to correct the popular myth in Japan that Hawaii has a blanket no smoking rule. The tourism group says the misunderstanding has caused the number of Japanese visitor to sharply decrease. However, of the Coalition for a Tobacco-Free Hawaii is not happy about the new campaign. "This is not really sending a message that Hawaii is concerned about good health," said interim president Kathy Harty. "We shouldn't give the message that aloha means smoking." Source: BBC

Tropical Storm Flossie Brushes Hawaii

After much hype over the past week about "Hurricane Flossie," it was downgraded to a tropical storm earlier this morning. The National Weather Service downgraded the hurricane warning after it’s wind speeds dropped to 8 mph and the storm took a slightly more northern course than expected. The tropical storm brushed the coast of Hawaii’s Big Island last night, however no injuries were reported. Officials are still tracking the storm to ensure it does not cause any further damage. "It still has very large potential to come in," said Troy Kindred, administrator for the Hawaii County Civil Defense Agency. "For whatever reason it has not done so so far. We'll monitor it until it is not a threat." For more information on the storm, check out Seattle Times.com.

Couple Survive Plane Crash Off Hawaiian Coast

On Friday a South Carolina couple was rescued off the coast of Oahu after their small plane ran out of fuel and crashed into the ocean. They managed to escape from the rental plane and climb into a life raft which they were rescued from within an hour. The couple survived the crash without injuries and according to Hawaiian Officials the couple declined medical. You can see pictures from the rescue at KHNL.com.

Hawaii Hotel Occupancy Plunges

According to Pacific Business News, hotel occupancy has fallen below the two-thirds mark throughout the Hawaiian Islands. During a seven day period spanning May 5th through May 12th, Statewide hotel occupancy slid down to only 58.8%. This represents a staggering 16.9% dip from the same week last year. The last time the occupancy rates fell below 59% was back in December of 2004. Hotel occupancy in Hawaii was actually lower than the national rate of 64.8%.