Study Suggest ‘Regressive’ Gas Tax Hike for Hawaiians

by H. Sterling Burnett, Ph.D., Heartland Institute, July 31, 2015 

Tom Yamachika, head of the Tax Foundation of Hawaii, has recently uncovered an economic study for commissioned by the state recommending, among other things, Hawaii raise taxes on gasoline by $.85 per gallon to discourage consumption and ostensibly improve the environment.

Noting Hawaii’s fuel taxes are higher than 46 of the 50 states' gasoline taxes, but low compared to the European Union’s gasoline taxes, to reduce consumption, the study recommends the state tax on gasoline be increased by 400%, which the authors argue would bring in an additional $418 million in revenue per year.

Keli'i Akina, Ph.D., president and CEO, Grassroot Institute of Hawaii argues there is a serious drawback to the study’s proposed gas tax hike. It’s extremely regressive. In a July 18 article, Akina says, “[I]t's like kicking a person when he's already down.  Hawaii's cost-of-living, business regulatory climate, affordable housing shortage, rising homelessness, and countless other economic problems have already crippled the average taxpayer and business owner.”

“Adding a Draconian increase to what is already one of the nation's highest gasoline tax rates will not incentivize cleaner energy, but will further damage the economic capacity of middle-class and poorer residents,” says Akina. “Even the study points out that fuel taxes are "highly regressive," meaning that they hurt the poor the most.  And for an increasing number of people, such a tax will simply be the last straw as they flee Hawaii for other states such as Texas or Nevada.”

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H. Sterling Burnett, Ph.D., (hsburnett@heartland.org) is the managing editor of Environment & Climate News.

June 20, 2015: $418M 'Clean Energy' Tax Hike: Fewer flights and fewer visitors to Hawaii would be expected