HR 60: REQUESTING THE DEPARTMENT OF BUSINESS, ECONOMIC DEVELOPMENT, AND TOURISM TO CONDUCT A STUDY ON THE EFFECT OF STATE AND COUNTY TAX STRUCTURES AND PROGRAMS ON THE LONG-TERM ECONOMIC GROWTH OF THE STATE OF HAWAII.

HOUSE RESOLUTION

REQUESTING THE DEPARTMENT OF BUSINESS, ECONOMIC DEVELOPMENT, AND TOURISM TO CONDUCT A STUDY ON THE EFFECT OF STATE AND COUNTY TAX STRUCTURES AND PROGRAMS ON THE LONG-TERM ECONOMIC GROWTH OF THE STATE OF HAWAII.

     WHEREAS, while Act 142, Session Laws of Hawaii, 2024, states that new business formations have grown by thirty-seven percent in Hawaii since the beginning of 2020, this is well below the national average and among the bottom ten states nationally; and

     WHEREAS, in the latest comprehensive entrepreneurial study from the Kauffman Foundation, Hawaii's early survival rate for startups is the lowest in the country; and

     WHEREAS, self-employment rates in Hawaii have consistently been lower than in the rest of the United States and, in 2020, Hawaii ranked fortieth for the State's percentage of self‑employed individuals; and

     WHEREAS, the state and county tax structures are factors in business investment decisions and often affect the movement of individuals both within, and to and from, the State; and

     WHEREAS, reports show that generally both companies and individuals are more likely to move to locations that have lower taxes; and

     WHEREAS, Hawaii recently ranked sixth-highest in the country for state and local taxes per capita and was ranked forty-second for business climate by the Tax Foundation; and

     WHEREAS, Article VIII, section 3, of the Hawaii State Constitution states that "[t]he taxing power shall be reserved to the State, except so much thereof as may be delegated by the legislature to the political subdivisions, and except that all functions, powers and duties relating to the taxation of real property shall be exercised exclusively by the counties, with the exception of the county of Kalawao. The legislature shall have the power to apportion state revenues among the several political subdivisions[;]" and

     WHEREAS, Article VIII, section 5, of the Hawaii State Constitution states that "[i]f any new program or increase in the level of service under an existing program shall be mandated to any of the political subdivisions by the legislature, it shall provide that the State share in the cost[;]" and

     WHEREAS, the growth of the state economy requires a comprehensive examination and evaluation of Hawaii's state and county tax structures to determine how new and existing state and county programs can be most equitably and efficiently paid for; now, therefore,

     BE IT RESOLVED by the House of Representatives of the Thirty-third Legislature of the State of Hawaii, Regular Session of 2026, that the Department of Business, Economic Development, and Tourism is requested to conduct a comprehensive study of Hawaii's state and county tax structures to determine how new and existing state and county programs can be most equitably and efficiently paid for in order to foster the long-term growth of the State's economy; and

     BE IT FURTHER RESOLVED that the Department of Business, Economic Development, and Tourism is requested to consider in the study a comprehensive cost of doing business analysis, factoring in Hawaii's high operational costs, including taxes, energy, labor, and imported inputs; and

     BE IT FURTHER RESOLVED that the Department of Business, Economic Development, and Tourism, in conjunction with the Economic Research Organization at the University of Hawaii, is requested to make policy recommendations on how the State can realign and prioritize existing state and county tax structures with existing state and county programs to better promote the long-term economic growth of the State; and

     BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Director of Business, Economic Development, and Tourism; Director of Taxation; Chairperson of the Tax Review Commission; Mayor of each county; and Executive Director of the Economic Research Organization at the University of Hawaii.

Report Title: 

DBEDT; DOTAX; Tax Review Commission; Counties; UHERO; Study; State and County Tax Structures; State and County Programs; Long-Term Economic Growth