Jacking up the heat in tax and fee hell
People asking what the Legislature is doing are surprised upon hearing lawmakers are hard at work finding ways to take even more of their money. It starts at the top, with the administration, which has already come forward with a number of proposals that will do nothing more than make it even more difficult to survive in Hawaii.
Although no one is whispering about tax increases, there are a number of proposals that would do just that. The proposals are disguised as fees or swathed in motherhood and apple pie issues, such as the restoration of the watershed or the fight against childhood obesity. Regardless of the purpose, taxpayers must ask the hard questions lawmakers refuse to ask: If these issues are of such high priority, why aren’t they using the taxes I already pay to state government? Are lawmakers doing the job we ask them to do — setting priorities for the precious dollars we give them in tax revenues?
Elected officials don’t want to upset any constituent by cutting programs and services to free funds to pay for critical needs. Instead, they have resorted to finding ways to raise new funding sources and dedicating those sources for a specific purpose, another downfall of recent Legislatures.
Taxpayers should be aware the administration has put on the table a laundry list of tax and fee increases that could exceed $70 million annually. This is hypocritical in light of the fact the administration just indicated the economy is improving to the point it can restore public employee pay cuts, replenish the rainy day and hurricane relief funds, and begin to pay down some of the state’s unfunded liabilities for public employee pensions and health care funds.
If the state has all this money, why does the administration’s list include a plethora of proposals to raise additional funds? For example, the Department of Land and Natural Resources proposes to raise the conveyance tax rate on properties valued at more than $2 million. The department estimates this increase will raise more than $10 million annually. If that proposal doesn’t survive the Legislature maze, the Health Department is proposing that a 10-cent fee be charged for every single-use shopping bag. If that proposal is adopted, the department estimates it could generate up to $15 million annually.
The counties have already moved to ban plastic shopping bags that would be the target of this fee. One may question what the use of plastic bags and the state’s watershed have to do with each other if no one will be able to hand out plastic bags in the near future. At that point, the fee is no longer a fee since there is no connection between the bag use and the state watershed.
Then there is the proposal submitted by the Department of Health that would impose a penny per ounce on sugary beverages. It is purported the new fee will increase the price of the beverage and become a financial disincentive to consume these drinks. The funds generated from this fee would be used to combat childhood obesity, which, no doubt, is a growing problem.
Didn’t First Lady Michelle Obama hit the nail on the head when she exhorted kids to get up and get moving? Indeed, a major contributor to childhood obesity is kids today are sedentary, preferring to sit in a corner with their iPads and text their friends, rather than chase a ball in left field. The tax on sugary drinks is nothing more than a grab for money based on the excuse that the higher price of sugary drinks will deter consumption that, in turn, will help the childhood obesity problem.
The problem is much more complex, but adopting the tax allows lawmakers to show they did something. In the end, childhood obesity will continue to be a problem because sugary drinks are but a small component of the factors that lead to obesity.
What we know these fees and taxes all will turn up the heat in tax hell by more than $65 million — if they are adopted.
Lowell L. Kalapa is the president of the Tax Foundation of Hawaii.