As another legislative session is about to convene, let’s reflect on some of the follies legislators have committed in recent years as they manipulated taxes and fees to spur taxpayers to change their behavior.
As another legislative session is about to convene, let’s reflect on some of the follies legislators have committed in recent years as they manipulated taxes and fees to spur taxpayers to change their behavior.
Over the past decade, lawmakers have misused and abused the tax system by offering taxpayers incentives to undertake activities that made no financial sense, or used the tax-and-fee system to punish undesirable behavior. This represented nothing more than poor tax policy, shifting the tax burden to the middle-income and poor.
The tax credits strategy primarily doled out tax dollars with no accountability or documentation of its success or failure. It made folks with the money to undertake many of these activities rich, while those who could not afford to invest in high technology, alternative energy or filmmaking had to pick up the tab for running state government. Lawmakers created many abuses with these tax incentives, poorly drafted legislation or, in some cases, by deliberately allowing statutes to be loose and vague.
In their enthusiasm to grab more money, lawmakers made certain some of the highest conveyance tax rates were imposed on nonowner-occupied residential property. They failed to understand such property usually ends up being rented and often includes multifamily complexes. All lawmakers could envision was some foreign investor buying a multimillion dollar mansion. Even the higher rates on conveyance of commercial property forced owners and purchasers to find other ways to convey those properties — selling the company that owned the property and not the property itself.
The dollar slapped on all petroleum products in the name of funding alternative energy initiatives instead went to the general fund and county economic development councils. It’s anybody’s guess just how that money is being spent and certainly worthy of a state audit.
Speaking of audits, consumers recently learned of the lack of oversight and the possibility of fraud in the state’s beverage deposit program. Adopted in the belief the nickel per container deposit would prompt consumers to return containers, the program has resulted in a steady income stream for people who collect these cans from highways and byways. The viability of this occupation raises a question whether the fee has really changed consumer behavior.
Then there are those proposals introduced in recent years, and may still be introduced, that may yet add more fees on consumers. Last session, the Health Department wanted to add a dollar to the car registration fee to fund the parking program for the disabled. They told lawmakers it would save the general fund a half million dollars, while failing to point out there are more than a million cars registered in the state. In passing this, they would have doubled their budget.
There was the proposal to have retailers charge 10 or 20 cents for each plastic sack used to bag their customers’ purchases — this despite the fact that at the time three of the four counties had already enacted bans on plastic shopping bags. But where was the money to go? Certainly not to fund a litter program to address the problem of discarded plastic shopping bags. Instead, it would have gone to a forestry program so general funds being used for that program could be freed up for some other extraneous program. It was nothing more than a money grab.
The idea to add a tax or fee on all sugary beverages to solve the problem of childhood obesity was added to the hopper a couple of years ago. Unfortunately, that strategy represents a myopic approach to the problem of childhood obesity. Even the nation’s first lady knows better than that. Her approach is aimed at the key reason why this generation of youth has packed on the pounds: the lack of physical activity.
If lawmakers want to punish the bad habits of kids that contribute to obesity, perhaps they should start with the No. 1 preoccupation of kids today: the fascination with their iPods, iPads, cellphones and tablets. Instead of slamming the tether ball around a pole or climbing a jungle gym, they sit in the corner of the playground texting their friends. A $200 fee on such devices might get parents to think twice about giving them to their kids.
Oops! Let’s not give lawmakers another bad idea.
Lowell L. Kalapa is president of the Tax Foundation of Hawaii.