As legislators race to meet internal deadlines to move bills from committee to committee, it is obvious that they don’t have a coordinated plan for their efforts this year. Based on the legislation that is moving, it appears that lawmakers are headed in a number of different directions at least in the area of taxes and public finance. Unfortunately, this does not bode well for taxpayers for on one hand, lawmakers are handing out all sorts of tax breaks and specialized funding while finding new ways to raise new money.
Take, for example, the continuing efforts of people in the solar industry who were at the legislature again this year to extend the 35% solar tax credit for another six or seven years to the year 2010. Lawmakers have chosen to ignore the fact that this tax credit has been around for nearly three decades having first been enacted in 1976. Despite being told that this tax credit basically favors those who have the money to install the $3,000 to $4,000 unit, lawmakers seem to mimic the mantra of the industry that if the credit is allowed to expire more than 100 jobs will be lost.
For years it has been pointed out that if widespread usage of solar water heating is to be achieved, a way must be found to help people acquire these devices while continuing to cope with their hot water bills. Because the initial purchase price is so very large, many families don’t have the money to make the switch. If on the other hand, families could acquire these devices by paying the cost over time in the same amount they would otherwise have paid for their hot water, this would make solar heating units available to more Hawaii families.
The advantages of this approach over the tax credit are obvious. First, it allows families who don’t have the initial purchase price to acquire a solar heating device because they can borrow the money for little or no interest. The repayment of the loan is made in installments that are no greater than the savings that they will realize in their utility bill.
Since more families can buy these devices, solar contractors should be busier than ever. Instead of a loss of jobs, there should be more jobs as it can be expected that demand will rise. If the loan program replaces the tax credit, instead of the state losing the money altogether, the money that is borrowed will be repaid and will go back into the state treasury for more families to borrow. Not only will the state recapture these funds, but the increased use of solar energy will help the state achieve its energy self- sufficiency goals.
Getting rid of the credit will also mean that solar water sales will have to be more price competitive, because they will no longer be able to tell customers not to worry about the cost because the credit is going to reduce the price. As a result of the increased competition, families should be able to get better deals on these devices.
While lawmakers are trying to give away the “store” with credits and exemptions, they are also trying to make up some of these lost revenues with new gimmicks to raise more funds. In addition to the proposed increase in liquor and tobacco taxes, there are proposals to slap a 5 cent per thousand gallons of water tax on water consumed for domestic use. If that bill passes, your water bill will go up. Another bill would slap a $1 per tire tax on all tires brought into the state including the ones sold with your new car. Yet another bill would tack a $10 surcharge on every car battery sold to insure that the old ones were turned in for proper disposal. Then there is the nickel per barrel environmental response tax that is proposed to go up to 25 cents per barrel.
And while airfares rise as a result of the higher cost of fuel, lawmakers fiddle over a proposed exemption from the general excise tax for lease rent the local airlines pay to lease their aircraft from people on the mainland. If this bill does not gain approval, neighbor island residents, as well as business travelers from Honolulu, can bet their bottom dollar that the cost of flying and shipping cargo like vegetables from Waimea, protea from Maui and poi for Kauai will go up dramatically.
So just when taxpayers thought they were going to get a break from higher taxes and fees, lawmakers seem to be unaware that they are about to raise the cost of living in Hawaii again. Some lawmakers even want to take back those tax cuts from last year because they think the economy is doing all right. Can you believe that?