Buying A Clean Environment With Our Money

By Lowell L. Kalapa

(Released on 3/02/08)

One of the three rings of focus under the main tent at the legislative circus this year is cleaning up the environment.

Unfortunately, it is of such a low priority that lawmakers don’t want to put that issue up against other general fund programs because they know that there are much more important issues that state government must address like education, repair of facilities at the University and so on. But lawmakers can’t ignore their eco-friendly constituents, so they are finding ways to hide the cost of going green from taxpayers. After all, it is an election year and lest the words “tax increase” pass over their lips, that is a risk they are not about to take.

No, instead of raising taxes, lawmakers are sneaking increases into the tax burden through user fees and charges. Last week we looked at a proposal that would tack an annual fee of $5,000 on all manufacturers of electronic devices plus make them pay another fee based on the weight of those devices imported into the state. And while lawmakers may be able to say they didn’t raise taxes, they will make the manufacturers look like the ogres because the manufacturers will have to increase their prices in order to recover the new fee. And we wonder why it costs so much to live in Hawaii?

Last year we warned you about a new fee on maritime containers to raise funds to fund the invasive species eradication and prevention program. It was noted that the $1 per 20 linear feet of container length would not raise enough money as the number of containers imported into Hawaii is rather limited and sooner or later lawmakers would have to come back to either raise the rate or find other sources to fund the program.

Sure enough, lawmakers are back this year to impose fees on aircraft containers and freight that is not shipped in containers. Of course, the cost of this additional fee will be passed on to us as consumers, but on the way to the shelf at our local stores at each stage of the wholesale and retail chain, mark-ups will be added. With a larger initial base for the products we consume, the cost of the fee will be exacerbated by those mark-ups. And that’s what’s wrong with imposing the fee at the front end of the wholesale/retail transaction chain.

In the discussion last year, one of the populations singled out as carriers of invasive species were visitors, both from the outside the state as well as visitors going from island to island. Hawaii has nearly eight million visitors, yet somehow in all the discussions, visitors got left on the cutting room floor. Instead, lawmakers decided to impose the invasive specie fee on shipping containers, perhaps hoping no one would notice. But notice or not, it is certainly showing up in everything we purchase and consume.

Several years ago lawmakers imposed what is known as an environmental response tax on every barrel of petroleum imported into the state for the purpose of setting up an emergency fund to clean up oil spills that may occur on Hawaii’s shores. It was set at a nickel per barrel.

Over the years, efforts were made to migrate other types of programs, such as environmental and natural resource protection, air quality programs, global warming, clean water and pollution run-off, solid and hazardous waste, drinking water, and underground storage tanks into this fund. All motherhood and apple pie issues.

Now comes the rub. Lawmakers now want to increase the fee from a nickel to 25 cents and are telling themselves that it is a minimal increase, but when one thinks about what that represents in a percentage increase, that’s 500%. How can lawmakers justify such an increase especially when it is imposed at the front end of the transaction chain? And you wonder why your tank of gas costs so much or the electric bill is now out of sight?

As a result, lawmakers are moving their targets away from the suicidal act of raising taxes to imposing and raising fees, and the overall tax burden has gotten heavier and the struggle to survive gets worse. How much worse?

According to the latest data available from the Bureau of the Census, between fiscal year 2004 and 2005 state and local revenues in Hawaii from fees, user charges and interest rose by nearly a half billion dollars. Most of it was from user fees and charges as interest rates during that period were relatively low. And the share taken by state fees rose in the same period, going from 75.3% to 79.6%. The burden of fees and user charges rose from $1,248 per man, woman and child in Hawaii to $1,623 in the year 2005.

And if they pass any of the fees lawmakers are contemplating this year, it will get even worse. After all, raising fees and user charges is nothing more than another tax increase for taxpayers.

Lowell L. Kalapa is the president of the Tax Foundation of Hawaii. Mr. Kalapa’s commentary is printed each week in the Maui News, West Hawaii Today, Garden Isle News, and the HawaiiReporter.com.