GOVERNOR LINGLE CALLS ON LEGISLATURE TO LOWER UNEMPLOYMENT INSURANCE TAX

For Immediate Release:  April 21, 2005

HONOLULU – Governor Linda Lingle today urged state legislators to lower the unemployment insurance tax burden on Hawai`i businesses.  Citing the latest statistics which show Hawai`i’s unemployment rate (2.8 percent) is the lowest it has been in 14 years, the Governor said the taxable salary that employers must pay taxes on for their employees should be lowered to allow businesses to use the savings for increased wages, added benefits, paying down debt or the purchase of new equipment. 

Hawai`i’s high employment level during the past two years has resulted in nearly $400 million being accumulated in the state’s Unemployment Insurance Trust Fund.  That amount is more than enough to maintain the state’s yearly unemployment costs for the next three years.

The Lingle-Aiona Administration introduced a bill earlier this year to lower the maximum taxable wage base from $32,300 to the federal minimum of $7,000 for 2005, 2006 and 2007. This would provide tax savings for employers over the next three years, while maintaining a healthy balance in the trust fund account.  By doing so, employers would save $196 million.  The measure is currently alive in SB294 SD3

“Hawai`i businesses currently pay the highest unemployment tax in the country, and that simply makes no sense,” said Governor Lingle.  “Instead of having money sit idle in the state coffers, companies could use the savings from the lower unemployment insurance taxes and reinvest it in their employees and in their businesses, and in turn further stimulate the economy.”

The Hawai`i State Department of Labor and Industrial Relations today announced that the state’s seasonally adjusted unemployment rate for March 2005 was 2.8 percent, the lowest it has been since March of 1991.  Since December 2002, 28,700 new jobs have been added in the state.

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For more information, contact:

Lenny Klompus  
Senior Advisor – Communications  
Phone:  586-7708

Russell Pang
Chief of Media Relations
Phone: 586-0043