Critics lose challenge to state's portion of rail surcharge

HONOLULU (HawaiiNewsNow) - A state Circuit Court judge has thrown out a legal challenge to the state's ability to keep a portion of county tax surcharges to fund rail transit.

The Tax Foundation of Hawaii had sued the state last year, alleging legislation authorizing the state to deduct 10 percent of the county surcharge to the general excise tax violates the Constitution.

The court rejected the group's claims, saying Hawaii courts were prevented from issuing declaratory statements in "any controversy with respect to taxes."

Since 2007, the state has collected more than $1.5 billion in county surcharge taxes to help build Oahu's rail transit project.

In a news release, the Tax Foundation of Hawaii said it would continue to fight.

The ruling "doesn't say that no problem exists, but just says that his court isn't the one that can fix it," said Tom Yamachika, foundation president.