Hawaiian Businesses To Be Hit With Soaring Unemployment Tax

Hawaiian employers will face a stunning jump in unemployment taxes next year, with the average amount paid per employee increasing to at least $1,040 annually from the $90 paid now.

The state said the dramatic rise in rates will take effect in April and comes as Hawaii’s unemployment trust fund plunges toward insolvency. The state has been paying out more in jobless benefits than it collects in unemployment taxes because of the slumping economy and jump in unemployment.

Employers yesterday said the enormous jump in unemployment taxes could damp an economic recovery and result in companies laying off workers to meet the increased costs or holding off on new hiring.

“It’s going to increase unemployment,” said Richard Botti, who represents more than 1,100 businesses as head of the Hawaii Food Industry Association and Legislative Information Services of Hawaii.

“The only way we can address it is either raise prices or terminate somebody so that person’s salary will cover the unemployment increase. It’s a slippery road we take.”

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