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Legislature Considering Repeal of Higher Tax Rate to Fund State’s Budget

The legislature is now considering a repeal on higher tax rates that were imposed on those in the highest income bracket in 2009 to offset the effects of the lagging Island economy. An income tax decrease has not been considered as a solution since 2007 when the State enjoyed a record budget surplus. It’s also an indication that the legislature is now revisiting the issue of using taxes to resolve the budget constraints. 

UHPA wanted to know how members felt about increasing taxes for the state’s general fund, which is used to support faculty and programs in the University of Hawaii system. This information assists UHPA in responding to various short-term and long-term public policy proposals.

The Question

UHPA commissioned Market Trends Pacific to conduct a survey, held January 30 through February 8, 2013. All UHPA members were asked the following question:

The University of Hawaii is funded through the Hawaii general fund, along with other state programs. Which of the following revenue sources would you favor adding or increasing to provide increased general funds?

Possible answers included the following:
a. Transient Accommodations Tax (TAT) on visitors
b. General excise tax
c. State income tax
d. Additional tax revenue from legalized gambling
e. None / Not in favor of any tax increase
f.  Don’t know / no answer

The Survey Results

A total of 847 UHPA members responded to the survey. The survey results showed 45% of the respondents are in favor of adding or increasing taxes for the Transient Accommodations Tax (TAT), which is a tax imposed on operators of transient accommodations such as hotel rooms, apartment, condominiums, or beach houses for less than 180 consecutive days.  This increase is typically passed on to visitors, which is why it is referred to as a hotel room tax.

Almost a third (28%) of those responding to the survey favored additional tax revenue from legalized gambling.  About a quarter (26%) of the respondents favored additional tax revenue from general excise tax, and 21% was in favor of deriving tax revenue from State income tax. A total of 18% was not in favor of a tax increase of any kind.

Age, Gender and Geography Influence Preferences

The survey showed that respondents 30 years old and younger are the most in favor of increasing the Transient Accommodations Tax (TAT). UHPA members 30 and younger and recent hires are more in favor of additional tax revenue from legalized gambling, and both groups are also less likely to oppose any tax increases.

Other findings from the survey: More men than women respondents favor an increase in the State income tax. University of Hawaii Maui College and Kauai Community College are the campuses most in favor of increasing the TAT.