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Deceiving Taxpayers with a Hidden Tax Hike

posted in: Weekly Commentary | 0
By Lowell L. Kalapa

You would think public officials would have gotten the message by now that taxpayers are fed up with shelling out more and more in taxes just to keep government running. Well, guess again! Proposals to hike your taxes are piling up in the legislative hopper again this year. There are the obvious ones to take back the personal income tax cuts or suspend the reduction of the pyrimiding of the general excise tax and there are subtle ones like the measure which would allow the counties to levy the real property tax on top of the already high rate levied by the public service company tax on public utilities.

Then there are the not so obvious ones that are slipped through the back door because they are imposed on businesses who will have no alternative but to pass the cost on to you as their customers. While customers may have a choice in some cases to decide not to buy a particular product, in this case many, if not all, of us will have no choice but to pay the cost of the tax hike.

The tax in this case is the nickel per barrel tax on all petroleum products imported into the state. The department of health would like to hike the tax by five times to 25 cents per barrel. While that quarter doesn’t sound like a lot, just imagine how many barrels of petroleum a family of four consumes in a year in the form of electricity, gasoline, and in the cost of everything they purchase as all goods and services rely on transportation that use petroleum products to get those goods and services to your nearest store.

Why does the health department need to hike the environmental response tax? Well, they propose expanding the duties of the fund that the tax helps to underwrite. In addition to the original purpose of taking care of oil spills, the fund would also pay for everything from energy conservation and alternate energy development to global warming, air quality and polluted run off. In other words, they want to raise the tax to make sure they can keep all those employees on the payroll even though they have nothing to do with the possibility of a petroleum or oil spill.

In a very real sense, the hike in the tax to fund these programs amounts to nothing more than a back door tax increase on all consumers and taxpayers in Hawaii. The tax increase will hike the cost of living – read here your electric or gas bills – for all consumers in Hawaii. It will affect the cost of producing goods and services in Hawaii so that Hawaii goods and services will not be price competitive with goods and services made in other parts of the world where they do not have to contend with this particular tax.

What is even more scary is that because this money goes into a special fund that lawmakers cannot touch, expenditures of the fund will escape the scrutiny of lawmakers for that very reason. That is, they can’t get their hands on the money. As a result, health department officials will not be held accountable as to how the moneys are spent in the same way general fund expenditures would hold them accountable. In fact, a few short years ago this was the very fund that was found to be used for very expensive filing cabinets and unlimited travel supposedly for training at a time when every other department was asked to cut back.

While many of these new responsibilities are worthy of the department’s concern, they have heretofore been funded by the general fund. Thus this proposal intends to move these programs off the general fund to be paid for by special funds with a tax that looks like it would hit only petroleum distributors. Unfortunately, this is a tax that affects all taxpayers in Hawaii because everything in Hawaii is dependent on the energy derived from petroleum.

The hike in the environmental response tax will affect all taxpayers. It will take back much of the savings that may be realized from the personal income tax and general excise tax cuts adopted by the legislature in the past two years. For what would have been gained with the personal income tax cuts will go right out the window with the higher cost of energy.

For this, you can thank the health department for bringing you a higher cost of living in Hawaii.

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