Rep Choy: "How many Girl Scouts are you going to arrest this year?"

That was Rep. Isaac Choy's question to the Hawaii State Tax Department on the department's initiative to zero-in on cash-only businesses.

The story in yesterday's Honolulu Advertiser is here.

The program was established through Act 134 which passed the 2009 legislature and was enacted in June of this year. The department has formed a Special Enforcement Section and is in the process of filling positions. The law now enables them to go after so-called cash economy businesses such as lunch wagons, farmers market vendors, swap meet vendors, mom and pop operations, and cookie sellers.

The intent of the law is to enforce Hawaii's tax collections, and tax officials estimate that they could collect as much as $100 million in additional general excise tax over the next three years. Rep. Choy, however, believes that the legislation is a bit "draconian" and may have to be tweaked this coming session. According to the story by reporter Sean Hao, the law requires that the seller register for a general excise tax license after ten transactions. A Girl Scout spokeswoman said that they will follow the intent and spirit of the law.

Former tax director Ray Kamikawa made the point that the Special Enforcement Section may be an ineffective use of state resources. Mom and pop operations will yield small amounts of revenues. The big money would come from drug dealers.