Don’t Raise Taxes for Rail

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Year after year, we have to fight proposals increasing the General Excise Tax and Use Tax by 1/2 percent — from the current 4 percent to 4.5 percent — a 12.5 percent tax increase.

National Federation for Independent Business members, who I represent, consistently vote in strong opposition to such proposals. The U.S. Census Bureau lists Hawaii as number one — highest in the nation — in per capita state taxes collected in 2002:


$2,747 per capita, 48 percent above the national average of $1,853, followed by California with $2,214, New York with $2,258, Florida with $1,484, and Texas $1,316.

A general excise tax increase is one of the worst things that could happen in our state as businesses and consumers continue to flounder financially.

Businesses who could would pass the tax increase along to the consumer, resulting in higher prices for goods and services. Small businesses, who must compete with the big box retailers, would find themselves having to “eat” the increased tax.

With our state’s finally seeing a flicker of light at the end of a decade-long sick economy tunnel, but still being dead-last-in-the-nation for business climate, this is not the way to go.

Remember, this is not a sales tax we’re talking about, as other states have. The excise tax pyramids at many levels — and it is regressive.

Some tax experts have said if Hawaii had a straight sales tax, it would need between a 12 percent to 16 percent sales tax to bring in the same amount of revenue as the 4 percent general excise tax.

Think what a 12.5 percent increase would do.

Unless you’ve owned a small business and know how tough it is to do business in Hawaii, you don’t realize that small businesses are lucky if they make a profit at all.

Increasing the already-dreaded general excise tax will result in more and more small businesses having to close down completely.

We experienced throughout the past decade how detrimental it is to state coffers to have small businesses, the backbone of the state’s economy, throw in the towel. The state’s general fund suffers.

A survey of our thousands of Hawaii members revealed a whopping 95.1 percent opposed to increasing the regressive and inequitable general excise tax.

This overwhelming majority of members are opposed not only because Hawaii is already one of the highest taxed states in the nation and not only because the general excise tax is a regressive tax — and not only because wherever it can, the additional tax will be tacked onto the already high prices in Hawaii — but also because in many cases the small business owner will be unable to even pass on the additional tax to customers because either the owner is forbidden by law to charge more or because the owner does not deal directly with the customer so is unable to pass on any additional cost.

In those cases where the small business owner will be unable to pass on the additional tax, he or she will see a 12.5 percent tax increase coming directly out of his or her own pocket.

Please halt this general excise tax increase proposal now. Find ways to improve Hawaii’s business climate, not make it worse. Be creative and innovative instead of returning to the same old tax and spend ideology of the past.

January NFIB Hawaii survey results revealed 51 percent of our members were more optimistic about the state’s business climate than they were a year ago, 26 percent not so optimistic and 18 percent undecided The remainder had no opinion.

Two years ago, in answer to the same question, more than half the respondents were pessimistic about the state’s business climate — showing a sea [of] change in attitude now.

And now, just when Hawaii’s economy is showing signs of improvement and hope is in the air, a General Excise Tax increase proposal pops up again making this idea as nutty as a squirrel’s breakfast.

”’Bette Tatum is the Hawaii state director of the National Federal of Independent Business, which represents thousands of small and independent business owners statewide. She presented this testimony Wed., Jan. 28, 2004, to the Senate Committee on Transportation, Military Affairs and Government Operation in response to a hearing on SB 2052, Relating to Mass Transit Funding. Mrs. Tatum can be reached via email at”’

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