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“Governor Ige has emergency powers,” one alert reader said. “Can he raise our taxes by himself?”
The answer appears to be “no, but.”
The Governor’s emergency powers relating to enforcement of existing laws are in Hawaii Revised Statutes chapter 127A. Basically, this chapter says that the Governor has the power, during an emergency, to suspend laws that are getting in the way of emergency efforts. He does not have the authority to decree new laws by himself. That is the Legislature’s job, emergency or not.
So, there won’t be new tax laws, but…
What if the Governor said, “We have a bunch of tax exemptions and credits that are getting in the way of collecting revenue that we absolutely need for our government to function. We are getting rid of them as of now.”
This is not a far-fetched scenario. You may recall about a decade ago our lawmakers passed Act 105, Session Laws of 2011, which suspended twenty-three different General Excise Tax exemptions, including some for the contracting business and some helping those who sold tangible goods to the Federal Government, for a two-year period starting on July 1, 2011. (It initially started off as a five-year suspension, but testifiers almost uniformly blasted the bill, and lawmakers cut it down to two years.) The suspension lasted until June 30, 2013, but thankfully was not renewed afterwards.
The governor’s authority to order suspensions, according to the law cited in his emergency proclamations, is Hawaii Revised Statutes sections 127A-12 and 127A-13. Section 127A-12 allows the governor powers relating to emergency management, but it does not once use the word “suspend” or any recognizable form of it. Section 127A-13 allows the governor additional powers during an emergency. Paragraph (2) allows the governor to relieve hardships and inequities, or obstructions to the public health, safety, or welfare. Paragraph (3) allows the governor to suspend any law that impedes or tends to impede emergency functions.
Does a tax exemption or credit impede emergency functions? Does one create hardships or obstruct public health?
Sure, a tax credit or exemption costs money, in the sense that revenue won’t be coming in the door quickly enough to pay off things we already are obligated to pay, such as salaries, post-employment benefit payments (such as the ones going to the Employees’ Retirement System or the Employer-Union Trust Fund that pays health benefits), rent, and bond interest. If any fiscal cost of a tax credit or exemption can be seen as impeding emergency functions, creating hardships, or obstructing public health, then the same can be said of anything else the state is obligated to spend money on, or devote any effort to (because we need to pay the people who exert that effort). So, at least to us, the justification for that type of suspension paints with too broad a brush and for that reason appears bogus.
In this time of crisis, we must have government functioning legitimately and we, the people, must have confidence that it is doing so. Now is not the time to use specious arguments to justify tactics that likely would be a surprise to the legislators who granted the Governor those emergency powers in the first place. We need to know that the tax money government spends and the other resources that it manages are handled fairly, wisely, and above board. This is too important a matter for the government to fail us.
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Tom Yamachika is the President of the Tax Foundation of Hawaii, a private, nonprofit educational organization dedicated to informing the taxpaying public about the finances of our state and local governments in Hawaii. Tom is also a tax attorney in solo practice and has been since early 2013. Prior to 2013, he was with the accounting firm Accuity LLP, which was formed in 2006 from the Honolulu office of Coopers & Lybrand (which later became PricewaterhouseCoopers). Before that, he served as an Administrative Rules Specialist in the State of Hawaii Department of Taxation from 1994 to 1996, where he drafted rules, interpretive releases, and legislation on several different state taxes. Prior to that, he practiced litigation and tax law with Cades Schutte Fleming & Wright in Honolulu.