HONOLULU – State circuit judge Edwin C. Nacino yesterday dismissed a legal challenge to the State of Hawaii’s ability to retain ten percent of the county surcharge to the general excise tax to fund rail transit, Hawaii Attorney General Doug Chin announced. In October of 2015, the Tax Foundation of Hawaii (“Tax Foundation”) sued the State alleging that legislation authorizing the State to deduct ten percent of the county surcharge and deposit it into the State general fund violated the United State and Hawaii Constitutions.
The court rejected the Tax Foundation’s claims, ruling that Hawaii law prevented courts from issuing declaratory judgments “in any controversy with respect to taxes.” Since 2007, the State has collected more than $1.5 billion in county surcharge taxes on behalf of the City and County of Honolulu, for use by the City to fund its rail transit system now under construction.
Deputy Attorney General Hugh Jones said “The court recognized the proper way to address this dispute is not through the court system, but through the legislative process.”
The State’s motion to dismiss the Tax Foundation’s lawsuit is attached.
For more information, contact:
Hugh R. Jones
Supervising Deputy Attorney General, Tax & Charities Division
Joshua A. Wisch
Special Assistant to the Attorney General