Excise Tax Increase Stresses Retailers

Carol Pregill
Carol Pregill

By : Diane Ako

HONOLULU (KHNL)- Starting January 1, the state's general excise tax will rise by half a percent to support a mass transit system. State tax officials and local businesses now are figuring out how to collect the tax and from whom. On paper, the new tax is simple: today, Oahu consumers pay 4.166 percent. Next year, they pay 4.72 percent.

Retail Merchants of Hawaii president Carol Pregill says the tax increase is confusing- it's during the transition from the Christmas buying season to the 2007 accounting period. And, it's only in effect on Oahu. "So if somebody buys something here and returns it to Maui, the refund should be based on what was paid to the customer. I think that's smart policy."

Estimated take for the first year? $196 million. It is expected to remain in effect for 15 years.