Anatomy of a Economic Development Project Tax Deal from Hawaii.

Hawaii has been working on a new rail line to keep commerce flowing. Its a deal that died during a regular session, but passed in a 5 day special session in August.

To fund the project, the top lawmakers agreed to these tax terms and kept all legislators fully apprised to move the deal fast:

• use specific numbers on the project and in the revenue generating plan:
  • use only the numbers of Hawaii Department of Budget and Finance and not lobbyist provided numbers
  • total revenue generated for the project: $2.4 billion over 13 years
  • $1.046 billion from a 0.5% general excise tax charged on Oahu taxpayers
  • $1.3 billion from hotel guests statewide via a 1% increase in the hotel room tax
  • Extends by 3 years the 0.5% general excise tax & increases the hotel room tax to 10.25 percent from 9.25 percent for 13 years.
• require certain levels of transparency
• require a timeline & sunset provisions on the taxes, which if not adhered to kills the project

Honolulu News  | How the Legislature’s ‘Big Five’ Crafted A Deal To Rescue Honolulu Rail