We are being sold the idea of a “mere half a percent increase” in GET, but it’s not a mere half percent tax increase. A change from 4 percent to 4.5 percent is a 12.5 percent increase in the tax. If they raised property taxes 12.5 percent there would be a revolution.
County roads have been getting pretty rough the past couple of years and nothing is being done. Then it seems a tax increase is proposed to fix them. Of course, it is promised that all the extra money will be reserved for transportation related issues. It seems to me we have been down this road before. More money needed for roads, or transit, so a new tax, or other scheme is proposed to solve the issue. The tax is passed and roads or transit get more for a year or two. Money, however, is fungible — it can go where it’s wanted. Other departments will claim they need more money so the general fund cuts the contribution to roads or transit and they are left with their original allowance, or maybe less. In politics, even definitions are negotiable so transportation could include new office furniture.
If you wanted to design a regressive tax it would look like the GET. The GET, although it is collected from businesses, is passed through to consumers with an add-on service fee. The GET becomes complicated, and I may have inadvertently made some mistakes here. It would be instructive for someone to unravel it for us all.
GET is regressive in an insidious, subtle way. It is an added cost of doing business. It hits hardest small local businesses, where the poor often have to shop, but is less costly to chains that buy nationally, or manufacture their own brands. There are strange exceptions that seem to benefit only the wealthy, like aircraft maintenance. Since GET applies to the businesses’ gross, it impacts low-income retail customers hardest because almost all of their spending is for things impacted by GET. Things a business buys and resells. Landlords pay GET and pass it on to renters. Service providers pay GET and pass it on.
It’s different for the well-off, though. A brokerage may pay GET on their business income and pass it on to the investor. The big item, the actual transfer of an asset escapes, because they merely arrange the transfer without ever owning the security. So the well-off, who invest a larger portion of income, escape GET for the significant portion. Homebuyers are usually buying from another homeowner; no GET, except on some transaction expenses. No GET on mortgage payment. No GET on money spent outside Hawaii, like luxury vacations.
How much of the new revenue will go indirectly to the raises for managers, or the Honolulu trolley via the loss of transient accommodation tax? You can be sure the accounting will be so convoluted no one will ever know.
One huge county expense is abandoned vehicles. China has decimated the market for steel scrap. Each AV costs the county over $500 to dispose of. This is bizarre because automobile dismantling is an incredibly profitable business. Mostly in cash!
A dismantler can buy a junk car for $50 or so, maybe haul it away for free and set it in a field. Selling it off part by part can bring in several thousand. Some don’t even take it apart, they let a buyer remove parts himself and then pay at the exit.
In Hawaii, dismantling takes place surreptitiously on the side of the road as people strip the parts they want from vehicles marked AV. A tax incentive for licensed dismantlers could help. Better record keeping at the DMV (pardon the California-ism) would make tracking the last owner possible. Most cars made after 1985 have the VIN on many parts. We need a communal brainstorm for new ideas to solve this unique problem to the islands.
Ken Obenski is a forensic engineer, now safety and freedom advocate in South Kona. He writes a biweekly column for West Hawaii Today. Email obenskik@gmail.com