Please cut taxes in 2023

by Keli'i Akina, Ph.D., President/CEO Grassroot Institute, January 3, 2023

If I could propose one New Year’s resolution for Hawaii’s leaders, it would be this: Cut taxes in 2023.

That should be a fairly easy resolution to keep. Throughout the election season, multiple candidates talked about the need to ease Hawaii’s tax burden, and new and established government leaders have said the same.

Gov. Josh Green made eliminating the general excise tax for food and medicine one of his major talking points. And on the county level, faced with concerns about skyrocketing real estate assessments, Mayor Rick Blangiardi promised to “aggressively” pursue ways to reduce that tax burden.

Tackling tax issues should be a win-win. That would allow our elected leaders to keep their promises, and Hawaii taxpayers would get some much-needed relief.

There’s only one problem. The clock hasn’t even struck midnight on Jan. 1, and those tax cut promises are already being compromised.

Senate President Ron Kouchi and House Speaker Scott Saiki won’t endorse the governor’s GET exemptions; they’re saying instead that they are prepared to debate the plan. Green continues to advocate for the GET cuts, but has also begun to discuss tax credits for low-income households, suggesting a willingness to back away from the exemption.

In addition, the promise of an “aggressive” response to soaring property taxes might take a disappointing turn as well. The city’s budget and fiscal services director recently brought up a one-time tax credit and increased exemptions as possible responses to address the rise in property taxes.

It seems the promises of tax relief that Hawaii’s politicians ran on are slowly morphing into tax credits — possibly even one-time refundable credits, which is little more than a minor distribution in wealth.

The bottom line is, a tax credit is simply not as helpful as a tax cut. Not only are credits generally temporary, they are vulnerable to being whittled away. And most important, they don’t provide the immediate relief that Hawaii’s taxpayers need — and that means they won’t have a lasting effect on the economy.

An added concern are politicians proposing higher fees, such as the so-called “green” fee, higher fees on vehicles and a tax on vacant properties, just to name a few.

Meanwhile, the state is raking in surplus revenue. Hawaii’s $2 billion surplus is projected to grow to $10 billion over the next few years. Does the government really need all that cash?

Things are not pono when the government is rolling in money while Hawaii’s residents continue to struggle with high taxes and a notoriously steep cost of living. Tax relief shouldn’t be limited to one group or morphed into select credits that don’t effectively address the issues residents face. All of Hawaii’s taxpayers could use a break — and the economy could benefit from the boost.

There are a lot of things Hawaii’s leaders could do to help lower the cost of living in our state. But if they can stick to this one New Year’s resolution, we would be moving forward on the right path. So once again: Please cut taxes in 2023. Don’t substitute a credit or employ tricky solutions that would limit the reach and scope of needed change.

There’s no more perfect time to cut taxes for all Hawaii residents. Let’s make 2023 the year Hawaii becomes more affordable for everyone.