Undermining economic recovery


BY LOWELL KALAPA | TAX FOUNDATION OF HAWAII

Lawmakers are off and running, promising to exercise care handling the state's fragile economy, surrounded by stories of struggling families trying to make ends meet as they lose their second job or see fewer hours.

But things have not changed at the state Capitol. Both the state administration and lawmakers have plans to spend even more, all in the name of jump-starting the economy. At the same time, state tax revenues continue to miss forecasts upon which lawmakers must base their spending plans. So, where will lawmakers get the money they want to spend?

What taxpayers should remember is in the past few years, lawmakers have gone back to the well time and again to raise taxes most taxpayers do not see yet feel the pain of every day. From the higher price for the bag of rice, to the larger tab to register the family car, taxpayers have been taken to the cleaners and there is almost nothing left. Will lawmakers again resort to raising taxes to balance the budget?

Although lawmakers profess they will take great care in handling the state's economy, bills already thrown in the legislative hopper certainly do not reflect that sentiment. While proposals to raise the obvious taxes — personal income or general excise — are absent, other measures to impose more burdens on the economy have been introduced. Proposals include those that would impose new regulations on employers, additional hoops through which new developments must jump and requiring businesses to insure against identify theft of their customers and employees.

While lawmakers may believe all these proposals will protect their constituents, they overlook the fact they will merely impose yet another cost on taxpayers and the economy, making it more difficult to recover from a sluggish economy. For the average taxpayer — who has not tried to build a building, open a store or just run a business — it may seem hard to fathom the current list of rules and regulations imposed by laws already on the books make it difficult to survive.

Many an eager young entrepreneur wanting to start a new venture in Hawaii has been slammed with the slew of requirements, from permits to filling out dozens of forms, just to open the doors of a new enterprise. While lawmakers think they are helping grow the economy, they have instead managed to make it almost impossible to succeed in Hawaii. And while those very lawmakers bemoan the brain drain of Hawaii's best and brightest leaving the state never to return, they have no one to blame but themselves. They have made laws that have driven bright entrepreneurs from the state.

Instead of creating a nurturing environment to help businesses grow and encourage new entrepreneurs, state and county laws have made it difficult to start a business and to stay in business and survive. Why? It seems lawmakers view businesses as nasty animals trying to rip-off their poor constituents who they think can't fend for themselves. Businesses are seen as an enemy that must be kept in check by lawmakers. For those who don't believe so, look at the taxes businesses pay, the labor regulations with which they must comply, the permitting hurdles, which must be straddled to build out their offices, or for stores to deliver their products or services.

What lawmakers don't seem to realize is it is the businesses of our community that provide the jobs constituents need. Businesses provide the payrolls that put money in the pockets of consumers, who spend money in the marketplace, and on which workers pay taxes to keep government running.

What lawmakers do seem to realize is businesses have the money they need to run their campaigns. As a result, businesses are targets for campaign contributions. For example, one special interest is sponsoring a $500 campaign fundraiser for a legislator with the obvious goal of ensuring their special interest legislation makes it through the legislative gauntlet. With that kind of money, how can a legislator turn down the legislation? Yet, in the long run, that proposal will hit all taxpayers in the pocketbook.

When lawmakers talk about caring for the fragile economy, one has to greet that with cynicism, since the legislative track record is littered with laws that merely raise the cost of living and doing business in Hawaii.

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