These are indeed difficult times. And at a time when the state is cutting programs, reducing its workforce and issuing furloughs, every sensible option for generating revenue must be explored.

Such an option exists with general excise tax-exempted entities and services. The list of agencies and events exempted from paying the GET numbers in the thousands, according the state Department of Taxation.
It’s true that some organizations on that lengthy exemption list, such as some nonprofit agencies, charitable organizations, churches, nonprofit hospitals and schools also qualify for IRS exemptions. Others, such as public utilities and insurance companies, pay a similar tax that may be viewed as an equivalent of the GET, hence their exemption. It’s understandable in those cases that the exemption may apply.
But the hundreds of others on the list deserve careful scrutiny. Sensible adjustments could yield millions at a time when the state is in dire need of a fiscal infusion.
State House Speaker Calvin Say said he would introduce a bill this session to re-examine the GET exemptions. That effort deserves support.
“We’re looking to level the playing field. Everyone else is paying the general excise tax except these particular entities,” Say said. “It’s a potential source of revenue without raising the general excise tax on everyone else in the state. It will be part of the overall financial plan in balancing our budget — it has to be or else it will be increasing the general excise tax, which I don’t want to do.”
So how much money does the total revenue from GET exemptions amount to? “It’s a big number. Close to 10 figures, or slightly over that,” said state Tax Director Kurt Kawafuchi.
Kawafuchi said his department is reviewing the GET exemptions and looking at scaling back or eliminating the exemptions. The focus will be on groups and services that are not already part of the IRS 501(c)(3) exemptions and that do not pay a similar form of tax. For instance, scientific facilities that contract with the federal government are currently exempt. But that exemption applies beyond research to things such as maintenance, housing, and commissaries.
Also on the hodge-podge list of exemptions are sales of liquor, cigarettes and agricultural products to carriers such as airlines, shipping companies and cruise ships.
“Over the years there have been a lot of different exemptions — they can be by type of taxpayer or transaction — they are sprinkled throughout the general excise tax law. We need to re-examine this in light of the current fiscal conditions to see if this is something we can afford today,” Kawafuchi said.
That’s true.
Some of the special interest exemptions being considered for repeal in Say’s draft bill include: cargo loading and unloading; merchants associations; call centers; ship building and repair; and the labor organization real property leasing exemption.
In a climate of cutbacks, innovative and sensible approaches to revenue generation must be part of any prudent fiscal plan.
The laundry list of GET exemptions deserves a full debate. And it will be up to lawmakers to buck those special interests, in favor of a more fair and equitable approach to bridging the budget gap.