By Lowell L. Kalapa
Everyone knows that old saying that goes “don’t tax me, don’t tax thee, just tax that man behind the tree,” and how we wish this is the way life and reality could be. Well, we know that doesn’t happen as we all pay taxes, but elected officials seem to believe that they can tax that man behind the tree more often and with a heavier load because that man behind the tree doesn’t represent the majority of voters.
Often that “man behind the tree” has been Hawaii’s visitor. After all, the poor visitor can’t vote in Hawaii, so raising taxes on that taxpayer won’t jeopardize the careers of any elected official, or so they would like to believe. However, a more frequent target of the elected official’s aim is the business taxpayer. Elected officials know that there are fewer voters who own businesses than there are workers or homeowners and therefore passing the cost of government on to businesses won’t endanger them at the ballot box.
Elected officials also reason that businesses can pass the cost of taxes and fees on to their customers whereas individuals must bear the full brunt of the tax imposed. So elected officials who don’t want to stir up a hornet’s nest of anger among their voting constituents find ways to push more and more of the burden of paying for government services on to businesses.
However, passing on the added cost of running government to business is nothing short of abdicating accountability. Instead of acknowledging that the cost of government is going up or that they are unwilling to reduce, if not eliminate, programs that may be popular with their constituents, elected officials end up passing on not only the cost but the blame to business taxpayers. Think about the excuse they give for putting a higher property tax rate on nonresidential properties as opposed to residential properties?
Elected officials swoon that businesses can pass the cost of the higher property tax burden on to their customers! Well, who do you think the customers of those businesses are? And you thought that grocery store was just greedy, ripping you off for a dollar more per bag of rice than last year?
And it is not only the property tax, but hidden in your utility bills is the public service company tax which the public utilities commission allows the various utilities to pass on to their customers in lieu of the general excise tax. On top of that, there is a public utilities fee which is paid by all utilities regulated by the commission to help pay for the expenses of the commission. However, if the commission doesn’t use all of that money in any one year and there is a balance in excess of $1 million, the amount over $1 million goes into the state general fund. So utility users end up subsidizing all other programs besides paying for the commission that is supposed to oversee the cost of what we have to pay for our energy and communications.
Another way to hide the cost of government, but still sock it to the consumer, is by imposing all sorts of fees for permits and other rights to undertake business activities in Hawaii. For example, while our elected officials seem to commiserate with us over the lack of affordable housing, they stop short of admitting that it is government fees that raise the cost of housing.
For example, even after developers of the Ewa plain on Oahu paid for transportation infrastructure to serve those newly developing communities, failure on the part of the transportation department to install those needed roadways forced the developers to move ahead and pay for the on-ramps and off-ramps needed. However, this came at an added cost of nearly $1,000 per house lot.
While that may be more the exception than the rule, buried within the development approval process for housing can be fees for parks, schools, and easements. At one point earlier this year, the City & County of Honolulu considered upping their developer approval fees by as much as 400%.
Think about it, when you walk down that grocery aisle and have sticker shock at how much a box of cereal is or if you are in the market for your first or a new home, ask yourself just how much of that shelf price or that list price of the home is really taxes and government fees. You would be surprised!
Even when we take our visitors to the cleaners for the hotel room tax, remember those tax dollars could have been spent on one more catamaran ride or another pair of slippers. Trying to hide the cost of government by passing it on to businesses merely ends up hurting us all as taxpayers and consumers.