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Bottle Bill is Just a Tax Hike in Disguise

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By Lowell L. Kalapa

So you think there were no tax increases in the cards. Surprise, as Rep. Hermina Morita admits, the so-called bottle bill is nothing but a tax increase in disguise.
The problem with that admission is that it just scratches the surface of the hidden tax increase by alluding only to the 1-1 1/2 cent handling fee and the nickel deposit fee.
It doesn’t even begin to address the hidden costs to be imposed on retailers and ultimately their customers. Additional personnel will have to be hired to handle the refunds of deposits and store the empties while additional time will have to be spent accounting for these nickels since under the law that nickel is not subject to the 4 percent general excise.
Additional storage areas will have to be set aside, meaning less storage for products to be sold or new storage areas to be built.
True, not all retail stores are required to become redemption centers if there is a recycling center within a two-mile radius of that retail outlet. With the implementation of the bill just eight months away, how many such recycling centers are there?

Advocates overlook that land is very expensive in Hawai’i and it would, no doubt, be economically unfeasible to throw up these recycling centers in populated areas where available land is very expensive. So, wish as they may, it is doubtful that there will be geographically convenient recycling centers to relieve grocers and other types of beverage sellers from the return requirement.
The added cost of personnel, warehousing, cleaning the beverage containers, paying the recycler to pick up the empties, and shipping the empties out of state will be reflected in the cost of all of the items the grocer sells — be it a bag of rice or a pound of tomatoes.
Thanks to our lawmakers, the cost of living and putting food on the table will rise because of this new mandate.
According to testimony on this measure two years ago, it is projected that the nickel will generate about $56 million, of which only $32 million will be claimed upon return of the containers. According to advocates of the bill, the other $24 million will be used to educate the public on the importance of recycling.

Read between the lines: it means hiring more public employees in the Department of Health to do this educating.

At a time when we don’t have money for textbooks in the classroom, we will spend $24 million on more public employees. Further, the full $56 million is money that is being taken out of the economy — even though a portion is being refunded, it will go back into the never-ending cycle of the deposit.

The nickel deposit, together with the hidden cost on grocers, hurts the poor most of all. It is already difficult for the poor to make ends meet; hiking the cost of groceries just means a longer line at the Food Bank. And you thought our legislators had a heart for the poor.

Instead, the message the bottle bill sends to the poor is, “Let them eat cake.”

Not only does the bottle bill represent a tax hike, but it reflects a lack of creativity and willingness to work toward new solutions that truly have public support. The so-called public support for the bottle bill comes from a very vocal minority because the vast majority of the population only now is learning of the increased costs this measure will impose on all consumers.

Thank you, lawmakers, for hiking the cost of living! Thanks for the tax increase!

Lowell L. Kalapa is the president of the Tax Foundation of Hawaii.

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