Here are some facts on the bills that the legislature overrode on the last day of session:
HB 895 –Tax increase on tobacco products other than cigarettes:
*Expected to generate $3.2 million through FY10.
*Helps to deter people from using tobacco products (including smokeless tobacco, snuff, cigars, little cigars, and pipe tobacco) and raises much need revenue for our state.
*Taxing tobacco products other than cigarettes addresses the growing use of smokeless tobacco by Hawaii's youth.
HB 1741 – Conveyance tax increase:
* Raises conveyance tax for sales over $2 million and second or investment house purchases.
*Expected to generate $8 million through FY10 from conveyance tax increase on only the highest priced real estate.
*Breakdown per amount of real estate transaction:
o Between $2 million and $4 million, you will pay 20 cents more per $100 of value – at $2 million you will pay $4,000 more (1 fifth of 1% more)
o Between $4 million and $6 million, you will pay 40 cents more per $100 of value – at $4 million you will pay $16,000 more (2 fifths of 1% more)
o Between $6 million and $10 million, you will pay 60 cents more per $100 of value – at $6 million you will pay $36,000 more (3 fifths of 1% more)
o Greater than $10 million, you will pay 70 cents more per $100 of value – at $10 million you will pay $70,000 more (7 tenths of 1% more)
*Expected to generate $6 million through FY10 from redistribution of funds going to Rental House Trust Fund and the Natural Areas Trust Fund.
HB 1747 – Income tax increase:
*Expected to generate $48.3 million from an income tax increase on the highest 2% of earners in Hawaii.
*There will be no tax change for:
o Individuals with taxable income less than $150,000
o Head of households with taxable income less than $225,000
o Joint filers with taxable income less than $300,000
o No impact upon MOST tax Payers; only about 3 out of 100 tax payers.
*Based on Hawaii's 2006 income tax data:
o Total of 471,792 tax filers in 2006
o 11,472 tax filers earned more than $200,000
o Only 2.4% of resident tax filers earned more than $200,000 in 2006
*Less known about this bill – it will increase all standard deductions and the personal exemption by 10% in 2011:
o This will save lower income taxpayers about $11.0 million per year
o We would like to have provided this fiscal relief to the lower income tax filers earlier, but nothing prevents us from accelerating these provisions if things get better next year.
*This bill will generate about $48 million from the highest income taxpayers in the state.
SB 1111 – Transient Accommodations Tax (TAT) increase:
*This bill increases the transient accommodations tax by 1 percentage point (from 7.25 to 8.25%) beginning on July 1, 2009 and another percentage point (to 9.25%) beginning on July 1, 2010 and requires the additional revenues to be deposited into the general fund.
* We expect to generate about $28 million next year and $60 million in 2010 for the general fund.
*1% point increase on a $200/night room for five nights equals $10 - People will not be deterred from vacationing in Hawaii by a $10 increase.
*The increases in this bill are set to sunset in 2015.
*The TAT was also raised in 1987, 1994, and 1999.
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