HONOLULU, Hawaii (HawaiiNewsNow) - Community activists paid Gov. David Ige a surprise visit at the State Capitol on Wednesday, urging him not veto a bill that would tax some of Hawaii’s largest landowners.
The bill, passed by the state legislature earlier this year, would impose the state’s 6.2-percent corporate income tax on real estate investment trusts, holdings that are more commonly known as REITs.
Real estate investment trusts own some of Hawaii’s largest shopping centers, hotels and office buildings, including Ala Moana Center and the International Market Place.
“The veto makes no sense, and the whole community is behind fairly taxing these corporations so the money they make here stays here," said Father David Gierlach, who works at St. Elizabeth’s Episcopal Church and is a member of Faith Action for Community Equity (FACE). “We cannot continue to support deadbeat dads and that’s what these corporations are.”
Under existing tax codes, REITs aren’t taxed in Hawaii because the profits go to shareholders who are paying income taxes in the states where they live.
Advocates such as FACE estimate the new corporate income tax on such trusts would generate about $50 million a year ― money they say could go toward funding affordable housing and educational programs.
But other estimates from the state tax director are much lower -- from two to 10 million, depending on what other deductions the REITs find to reduce their tax liability.
But Gov. David Ige said last week that he would likely veto the bill because it could discourage future investment in Hawaii.
“I know it will scare away investors,” said real estate expert Ricky Cassiday.
Cassiday says only one state in the country, New Hampshire, taxes REITs.
“You gotta be careful of hurting them, especially because the tax consequence is not a big boost," he said.
The governor has until Tuesday to either veto the bill or let it become law without his signature.