BY FRED HEMMINGS – The Tax Review Commission hired a Mainland company to perform a review of Hawaii taxes and make recommendations. The PFM Group’s recommendations on ways to raise taxes are insulting. Hawaii citizens already rank among the highest taxed in the nation. Hawaii’s taxes are regressive and cruel. The PFM Group recommended raising taxes in numerous ways. The most insidious recommendation is to raise the General Excise Tax. The GE tax is extremely regressive. It hurts the poor the most. It is important to note that the GE tax is deceptive.
The Tax Foundation of Hawaii estimates that if you replace the GE tax with an across the board sales tax, that sales tax would have to be approximately 10%. The GE tax adds approximately 10% to the cost of goods and services in Hawaii. The GE tax is levied on income from all financial transactions, whether it is a doctor, merchant or individual trying to eke out a living as an independent contractor. Hawaii even taxes the hungry and sick because the GE tax is levied on food and medical care.
While in the Senate, I voted against the .5% GE tax increase authorization to build the expensive rail. It has been reported that just the .5% tax increase in 2011 took approximately $220 million from the working men, women and businesses of Oahu. That money could have paid bills and created real jobs.
Other recommendations from the PMF Group betray common sense and fair play. We must shift the entire discussion from raising taxes to reducing government spending. Several of us in previous legislative sessions voted against bloated budgets. There are numerous examples of wasteful, inefficient, and unfortunately fraudulent spending in state government. It is also important to note Hawaii citizens’ suffer from the highest income tax rates in the nation.
Eliminating needless government spending and cutting taxes will help all taxpayers and the economy. Budget cuts could come in areas such as the state medical hospital system where patients pay twice; once for services then once again through tax subsidies we all pay. Years ago there was a proposal by physicians to build a private hospital on Maui to compete against the state owned Maui Memorial hospital. That proposal was turned down by the State. Talk about a conflict of interest.
Millions could be saved annually by privatizing certain state hospitals and other Government services. Hawaii’s entitlement programs such as food stamps through EBT cards and MedQUEST eligibility requirements allow for individuals with significant assets to collect free food and medical care. That is because eligibility is based on earned income, it does not fairly index assets such as home and car. The Dept. of Education continues to be a fiscal sink hole with no accountability and stagnating results.
These are just three big ticket items. How much did taxpayers pay for the inane report by the PFM group? There are many areas where conscientious legislators could reduce government spending. This debate is the foundation of not only Hawaii’s problems but the nation’s as well. We must reduce Government spending and return the taxpayer’s hard earned money through tax cuts not debate ways to raise taxes.
WE can diversify our economy and make Hawaii more affordable. The choice is clear.
Fred Hemmings served in the State House and State Senate and is a Republican candidate for state Senate in 2012.