Hawaii payroll tax is cut 22% - Hawaii News Now - KGMB and KHNL

Hawaii payroll tax is cut 22%

HONOLULU (HawaiiNewsNow) -

Hawaii employers will enjoy a significant reduction in a significant cost of doing business, when the state payroll tax is reduced 22 percent in 2015.

When workers become unemployed, their unemployment compensation checks are drawn from an account that is funded by contributions by employers, so much per year per employee.

The average 22 percent reduction effective in the new year works out to about $100 less per employee, and collectively to a savings of $50 million. The fund is replenished in good times so there are funds during downturns. But once ample funds are restored it becomes possible to reduce the required contribution.

"This is welcome news to many small businesses throughout the state who can now consider investing the savings in their businesses and personnel," said Gov. David Ige in a statement, issued with the announcement Monday by the state Department of Labor & Industrial Relations, hours after HawaiiNewsNow broke the story that a reduction would soon be announced.

A savings of $100 per employee works out to thousands for many restaurants and shops. It can be sufficient to enable an employer to hand out bigger raises, or investment in new equipment.

The fund itself has abour $400 million. From 2007 to 2010 it sank from more than $500 million to a negative balance that required borrowing $183 million from the federal government to fund unemployment compensation checks. The jobless rate for Hawaii was more than 6 percent in those years. Now it's closer to 4 percent. At current levels of unemployment the fund has enough money to pay those benefits for a year.

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