Zoo Atmosphere Pervades Legislature-Special from the Tax Foundation of Hawaii

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Taxpayers might think that their lawmakers are tackling the books to help solve the financial crisis that challenges the state with everything from “furlough Fridays” to the lack of staffing in the health department to monitoring pests that plague the food markets.

But that seems to be far from reality when one checks out the issues that have been thus far pursued. While it may be a serious issue to some, lawmakers debated whether or not ice cream should be banned on school campuses. Another issue that stalled in the house was whether or not community associations could dictate if residents could fly the American flag when a bill was held in committee by the chair.


Meanwhile, in the money committees, lawmakers turned over every pebble, rock and stone searching for ways to raise additional revenues to help fill the estimated $1.2 billion shortfall. They considered bills that would raise taxes beginning with the general excise tax to the personal income tax to the in-lieu taxes like the bank franchise tax, the insurance premiums tax, and the public service company tax. And lest they overlook those taxpayers who enjoy certain tax “benefits,” they searched through current exemptions, deductions, and tax credits, shaking the money tree hoping to find the elusive revenues they need.

But true to form, find another issue that needs to be addressed and lawmakers come up with another way to pay for it. Don’t mind the fact that Hawaii’s taxpayers are already some of the highest taxed in the nation, lawmakers have no shame in finding another tax or fee to charge to solve the problem. In this case it is the problem of obese children.

Having read a couple of studies on childhood obesity, lawmakers have come to the conclusion that drinking soda is the culprit and have proposed to slap a hefty surcharge on the sales of soft drinks. And despite being told that there are just as many studies that cite other reasons for childhood obesity, such as lack of exercise, fatty foods like hamburgers, and lack of parental oversight, legislators seem to believe that if they just make a product expensive it will somehow deter use.

Then again, perhaps there is an ulterior motive. Given the gaping hole in the budget, is this proposal merely another way to raise revenues to balance the state budget? If lawmakers believe soft drinks contribute to childhood obesity then why not just ban the product? Of course, as some makers of soft drinks pointed out, discouraging the sale of sugary soft drinks translates into decreased demand and, therefore, less sales resulting in the lay off of workers who are employed to make the product. Is this really what lawmakers want to do especially during these tough economic times? More people on unemployment with less dollars to spend also translates into less tax revenues.

But it seems a legislative trademark to respond to issues by finding a way to pay to solve the problem. Such is the case with the proposed “barrel” tax on every barrel of petroleum imported into the state. The tax, which is currently imposed at a nickel per barrel, would rise by one dollar. Its supporters believe this will be a way to pay for the development of alternate energy resources as part of the Hawaii Clean Energy Initiative (HCEI) that is supposed to make Hawaii less dependent on fossil fuels by the year 2030. And how could one argue against energy independence, given the high cost of oil and gasoline in the past few years.

But the question is, why does a tax have to be raised in order to fund yet another government initiative? Of course, those promoting the bill will benefit from the windfall of tax dollars that will come at the expense of the taxpaying public. The promoters say it will mean only a few more pennies per gallon of gas which, of course, is simplistically based on what that dollar would translate into per gallon of gasoline and not the economic impact such a tax would have on Hawaii.

Of course, proponents don’t talk about how that dollar per barrel will make its way into everything we consume in Hawaii. It will be included in the overhead costs of businesses in Hawaii, from grocery stores to the garden shop, because energy is key to our daily lives.

As that cost is accommodated in the shelf price of goods and services, businesses will add their percentage mark up sending prices even higher.

Since lawmakers are not willing to give funding for other programs, they will buy into the proposed tax hike, thinking nothing of what it will do to their constituents. Thanks a lot for whacking the taxpayer again.

‘Lowell Kalapa is the president of the Tax Foundation of Hawaii’