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Obstructing Economic Growth Contributes To Social Problems

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By Lowell L. Kalapa
(Released on 5/1/11)

As lawmakers gird themselves to vote on hundreds of bills, many of which will raise either taxes or fees or add new ones as they try to close the budget shortfall which has been estimated to top $1.3 billion over the upcoming fiscal biennium, they, and taxpayers, should pause to ask themselves just what kind of effect these increases will have on Hawaii’s people and the economy that provides the lifeblood for not only government with tax revenues, but the means by which families can survive.

During the past fifty some odd days of this year’s legislative session, taxpayers watched as lawmakers searched for ways to “balance” the state budget by not only looking for programs and services to reduce or eliminate, but also for ways to raise additional revenues. While cutting expenditures is a difficult task as each program or service has a defined constituency, it appears that lawmakers had a difficult time trying to raise additional revenues as they vacillated back and forth throughout the session to test the public opinion waters as to which proposals might be acceptable.

So, here they are at the end of the 2011 session with a slew of proposals that will tweak this or that to raise additional revenues, but no overall across-the-board tax increase. Instead, lawmakers have taken to again attacking a specific well-defined constituency rather than the overall population, hoping that taxpayers won’t notice that the heat has been turned up again on their pocketbooks. Why are lawmakers afraid to adopt an across-the-board tax increase? Could it be that they have nickeled and dimed taxpayers over the last ten years with ever so subtle increases to this or that fee or tax that taxpayers are beginning to realize how much more it costs to live and do business in Hawaii.

For the average family, the hikes have been masked because the cost of those tax and fee increases are embedded in the cost of goods and services we need just to survive, be it putting food on the table, or going to the doctor or dentist or a run of the mill auto tune-up. Just compare the grocery ads of ten years ago with those in yesterday’s newspaper. Sale prices for food are now what used to be the regular price. In some cases, the quantity has shrunk while the price remains the same or has risen.

And no, lawmakers don’t want to face the hurricane that an implicit across-the-board tax increase would generate. Instead they are more than willing to hide it in the cost of goods and services and let the businesses take the blame for the higher cost of everything.

While elected officials would like to blame the current rise in unemployment on the national “recession,” the tax and fee increases have had a direct effect on the loss of not only jobs, but businesses as well. We mourn the loss of a favorite restaurant or the disappearance of a favorite store or product. One certainly has to ask what put these establishments out of business. Certainly, the economic downturn nationwide has had an effect, but one also has to admit that the increasingly heavy burden of taxes and regulations imposed by local lawmakers has had a dramatic effect on pushing those that were on the edge to begin with finally out of business.

For those who don’t frequent the capitol building, they would be amused to see the numerous signs in the elevators and on bulletin boards hawking all sorts of foods or services in an attempt to raise contributions for the local food banks. No doubt, these efforts are to persuade the visiting public that lawmakers truly care about the hungry and the poor. But do lawmakers realize that they are a major reason why there are so many poor and why so many families going hungry?

The many laws legislators have approved in recent years have made it difficult for not only families, but also businesses, to survive in a tough economy. As more and more businesses retreat or go out of business, more jobs are lost and more workers are put on the unemployment lines and more line up at the local soup kitchens and at the local food banks.

So, yes, while lawmakers may have had a tough challenge this session to balance the budget, in balancing the budget they have imposed an even heavier burden on the economy. When and until lawmakers realize that the real game is about economic vitality, the future of the state will be doomed to mediocrity, if not failure. When and until government gets out of the way and allows the economy to flourish, we can all look for worse times ahead.

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.


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