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You Mean the Economy Isn’t Doing Well?

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By Lowell L. Kalapa

The other day the House Finance Committee placed an eclectic smattering of bills on the agenda for hearing including bills to exempt alcoholic beverages from the state liquor tax when the product is sold out of state to a 10% tax rate on hostess bars and cabarets.

Also on the agenda were the two bills discussed earlier in this column that would reduce the pyramiding of the general excise tax on leasing and wholesale services. Aside from testimony from the tax department and the Tax Foundation of Hawaii, there were only two other individuals present to provide testimony in support and a few pieces of written testimony in support from segments of the business community. That show of “support” from the business community was disappointing especially when one considers that this problem has been a major thorn for the business community in past years.

Perhaps it was the fact that the business community didn’t know about the hearing or that perhaps they were just too busy trying to run their business to pay any attention to what is happening at the legislature. In any case, the discussion during the question and answer period was lively and perhaps indicative of why Hawaii is in this economic and financial malaise.

Although committee members heard the argument that these bills would help to reduce the cost of living and doing business in Hawaii, the overriding concern appeared to be the impact that these bills would have on state tax revenues. Over and over, the discussion would return to the millions of dollars that would be lost and just where, oh where, was the committee going to cut spending in order to accommodate this revenue loss.

What seemed lost on lawmakers is that the economy is hurting and to do nothing to help make Hawaii a more business friendly and tax friendly place to do business, the more likely that lawmakers will see even less revenues next year. Lawmakers don’t seem able to make the connection that all of the regulations and taxes that they have approved over the years have contributed to the demise of what should be a vibrant economy and healthy community. Instead, the mentality is one of how can we raise more of the money they like to spend on new programs and positions.

When asked to cut spending, they point to the possibility of laying off state workers which they reason will only put more people on the unemployment and welfare rolls. Well, excuse us as taxpayers, where do lawmakers think taxpayers are headed as they search out new taxes and fees to support the monster called state government. Lawmakers have turned the screws so tight on businesses and families struggling to survive in Hawaii that it has closed many of those businesses down and sent many families out of state.

So the question for the House Finance Committee on those two bills – do they approve the measures and start to do something about improving the business climate or do they worry about how much less revenues they will have to balance the state budget? If lawmakers adhere to their past track record, they probably will opine that they just can’t afford to lower taxes and reject the bills.

Unfortunately, they will have little to show their voters that they did something positive for the economy. For us as taxpayers, we might just as well start looking for some place on the mainland to relocate, because with that attitude, there is no hope for survival in Hawaii.

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