Small Business News
June 2005 | Online Edition
Chamber's "Voice" OKs Tax Hike
by Malia Zimmerman
The Chamber of Commerce of Hawaii has a history of supporting General Excise tax increases since 1992. This year the Chamber changed its position three times. In 1992, The Chamber lost a substantial number of its 4,000 members when the supposed business advocacy organization endorsed the Democrats’ 1992 proposal to increase the state’s General Excise Tax to fund a heavy rail system.
The Chamber had further erosion of membership when small businesses realized the Chamber supported big business and big government proposals, such as then Gov. Benjamin Cayetano’s 1998 Economic Revitalization Task Force plan. The plan included a proposal to raise the state’s General Excise Tax by 12.5 percent. Vicki Cayetano, Gov. Cayetano’s wife, is now one of the highest-ranking members of the Chamber board, slated to take over as president in 2007.
So many Chamber members resigned their membership in protest over these issues (there are now 1,100 members remaining, according to their published figures) that the organization made some changes.
In testimony at the Hawaii State Legislature in 2005, president and CEO of the Chamber Jim Tollefson said while the Chamber does not support a tax increase, the need for rail transit as a solution is paramount. Therefore, he said, the Chamber would support the rail knowing a tax increase came along with it.
However, when the Chamber membership howled at Tollefson’s statement, the Chamber restated it had not taken a position and Tollefson was simply discussing transportation options.
In a Chamber board meeting that followed, the Chamber reported that its members took a formal position to oppose the tax. And in fact, the Chamber was one of the groups planning to back the April “No New Tax Rally” at the Hawaii State Capitol. The Chamber would have joined long-time opponents of tax increases: Small Business Hawaii, the National Federation of Independent Business, the League of Women Voters, Retail Merchants of Hawaii, Hawaii Association of Realtors, Hawaii Restaurant Association and many others.
But just days before the legislative session was scheduled to end May 5, the Chamber issued a statement to its members from Tollefson. In the one-page statement, Tollefson once again reversed the Chamber’s position — this time back to the original proposal to support the tax increase and rail — the position that got the Chamber’s members so outraged in 1992.
After that, Tollefson issued yet another statement qualifying the Chamber’s position in favor of the tax hike, but only if the counties have the option to increase the tax, rather than the state Legislature.
Members, who were not consulted by the board, also note the Chair of the Chamber, Christine Camp Friedman, is a close ally with Honolulu Mayor Mufi Hannemann, even co-chairing Hannemann’s search committee for directors of his cabinet. Because Hannemann’s administration is pro-rail, with the City Department of Transportation Services recently issuing a Request for Proposal for the rail due May 16, 2005, Hannemann and other pro-rail politicians were able to influence Friedman and the Chamber into another flip flop against the wishes of its own members.
The Honolulu City Council, meanwhile, is fast tracking Bill 40, which will increase the state’s General Excise Tax by 12.5 percent. The bill, introduced by Planning and Transportation chairman Nestor Garcia just a day after the bill authorizing counties to increase the tax, was heard May 11 in the Honolulu City Council.
Gov. Linda Lingle has not yet signed the bill, but likely will, she says, even though there are portions of the bill she does not agree with, including the state’s involvement with collecting the tax.
Mayor Hannemann says he hopes to use the tax collected, in combination with federal funds, to undertake the construction of a major mass transit project to shuttle people from Kapolei to downtown and link to the University of Hawaii.
Advocates of the tax increase hope it will pass the council by July 2005. See more at http://www.cochawaii.com.
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