Today Fiscal Year Begins & Taxes RISE!

KHON2 News: 
Hawaii residents may hate July 1, the start of the new fiscal year, as much as they despise April 15.

From sewer fees to bus fares, a bevy of new fee hikes and tax increases are set to begin Thursday.

“We’re getting hit left and right and it’s going to hurt all of us,” said Lowell Kalapa, president of the Tax Foundation of Hawaii.  “It means less money to be spent on discretionary items, be it a pizza or a movie.”

Kalapa says the most detrimental tax increase passed by state lawmakers is the barrel tax, which increases the tax on every imported barrel of oil by $1 to $1.05.

“That tax alone adds to the overhead of doing business here in Hawaii,” Kalapa told Khon2.  “We’re gonna lose companies and we’re gonna lose jobs and right now what we need most is the creation of jobs.”

Lawmakers passed the increase on the barrel tax to raise money for energy and food security programs as well as a possible diversion to the general fund.  However experts have said the tax could raise fuel prices by as much as four cents per gallon.

Hawaii’s transient accommodations tax, also known as the hotel room tax, will go up to 9.25, a one percent increase.  That means visitors will have less disposable income to spend during their vacations.

“If I have less money because of my hotel room tax I’m not going to take the catamaran ride or I’m gonna eat at McDonald’s instead of Wolfgang’s,” said Kalapa.  “It means less money back into the economy.”

State lawmakers also targeted so-called sin taxes to supplement a $1.2 billion shortfall to the state’s general fund.  Cigarette taxes in Hawaii are going up another 40 cents per pack, reaching the $3 mark.

Kalapa says while most in the middle class will be able to weather the tax increases by cutting certain expenses, he believes the poor will suffer the most.

“The poorest of the poor are the ones that are really gonna get hurt,” he said.  “They either go back on welfare or they go out on the beach to live.”

Fees at the county level are also going up with the start of the new fiscal year.  Oahu residents will by 25 cents more for a one-way bus fare, while monthly bus passes will cost $10 more for adults and $5 more for kids.

Wastewater fees in Honolulu County are also on the rise.

On Thursday the sewer base charge jumps nearly $9 to $68.39 per month – a 15 percent increase.  The sewer usage charge increases from $2.51 per thousand gallons to $2.88 – a 14.7% increase.

The sewer fee increases are expected to raise another $42.3 million for the city in fiscal year 2011, with total collections expected to reach $318.5 million.

Kalapa worries the growing tax burden on Hawaii residents will force some to move elsewhere and he fears what it may do to Hawaii’s sputtering economy.

“It means less money back into the economy and going to the state government,” he said.  “I think there’s a real danger that we’re gonna stumble along as far as the economic recovery is concerned.”