The Government Plan to Hobble America’s Economic Strength
We are not creating private jobs nor improving our business and investment climate. But we can. The futurist and author Joel Kotkin addressed the Council of State Governments—West Conference in Hawaii last week. His admonition was to talk to the private job creators—not government—about adding needed income producing jobs. We need to incentivise private employers to spend more, invest more and add jobs thus creating a bigger wealth and tax pool.
…. we should not raise the debt limit, which was “modest” compared to the current national debt of $14.5 trillion ($ 46,450 per citizen), because there was a limit or ceiling for a good reason. We should instead, utilize fiscal restraint.
Governor Abercrombie signed Act 105 (SB 754) a month ago (June 14) and the law, which became effective July 1, is causing major economic disturbances in Hawaii as predicted.
The bill was a key component in the Governor’s 2011 plan to increase tax revenues to try and meet the $1.3 billion two-year (FY 12, FY 13) budget deficit. The estimated taxes generated by this one measure are more than $400 million over the two years.
This one bill, by “temporarily” suspending long-practiced exemptions from the State’s regressive and pyramiding gross income general excise (not sales) tax has added to cost burdens for business and individuals.
Proponents of the bill described it as an “equity” measure that would end tax loopholes and bring in needed revenues. It was also heralded as “temporary” for two years only. Do you remember the last “temporary” Hawaii tax?
We opponents of this bill explained this was not a loophole but an attempt to balance out double taxation in the GET. We warned that the law would have far-reaching negative economic implications, unintended consequences and a new and heftier cost burden on Island residents.
All of this has come true since July 1 including higher airline costs, added shipping surcharges (Matson added $52 per container just for this law), new costs for sub contractors and sub lessees.
However, the second shoe had fallen. Other issues—unintended—began to surface last week as AOAO condo associations began to notify owners that previously tax-excluded utility, maintenance and other separated cost items would now be subject to the 4.5% GET on Oahu. Non-profits are also adversely burdened. Other transfer entities have also been informed of new tax costs.
Calls to the State Department of Taxation for clarification have resulted in mixed but generally unsatisfactory responses. Calls to individual legislative offices have also resulted in confusion.
Why? Because the law is confusing and not fully transparent.
The history of the law needs to be disclosed also. Especially, since lawmakers such as myself supported the original bill and now are being criticized for supporting the new law (we don’t).
SB 754 was introduced on January 21 this year by Senators Carol Fukunaga,Suzanne Chun Oakland and Rosalyn Baker. Four other Senators, including myself, signed on to the bill. SB 754 was a Small Business Caucus package bill that, “Amends distribution of partial payment of taxes to principal first, then penalties, then interest.” A good bill. A necessary bill.
The small business reform bill passed the Senate WAM Committee with amendments unanimously, and the full Senate 24-0 (Shimabukuro was excused) on March 8. It went to the House.
On April 4, the House Finance Committee amended the bill further.
By now, the bill’s contents had been “ gutted and replaced” with the tax increase in place.
On April 29, the new bill, SB 754,SD1, HD1, CD1 emerged from Conference Committee.
The public was just beginning to understand the full impact of this bill. There was bipartisan pushback from the final version of the bill.
Final “No” votes in the House (5/3/2011) were: Brower, Ching, Cullen, Fontaine, Har, Johanson, Marumoto, Riviere, Thielen and Ward. (Carroll and Pine were excused).
Final “No” votes in the Senate (5/3/2011) were: Baker, Chun Oakland, Espero, Fukunaga, Green, Ihara, Slom and Wakai.
Now the bill is law and the consequences continue to emerge. My office will inform the public on any further tax decisions.
In the meantime, the senate Minority’s Budget Chief, Arik Look, has prepared this summary with additional information.
Town Hall Meeting on the Closing of Foodland in Hawaii Kai
Representative Gene Ward and State Senator Sam Slom held a Town Hall Meeting on the Closing of Foodland in Hawaii Kai
The demographics for the zip codes 96821, 96822 and 96825 shows approximately 92,000 people.
“It’s insane to think that Safeway and Costco can sustain a community and just Hawaii Kai, with almost 60,000 people,” said Paige Altonn a local resident who organized the town hall meeting and has started a petition.
For more information contact Representative Gene Ward at repward@hawaii.gov or Senator Sam Slom at senslom@capitol.hawaii.gov.
Residents Fight Foodland Closure – Meeting Set Tuesday at Kaiser High School
Not since the original “Save Our Star-Bulletin” effort more than a decade ago has there been such an immediate, passionate and widespread true residents’ movement to save a commercial enterprise as is the case with the Koko Marina Foodland Grocery store.
