Watch Out for Rising Taxes in Hawaii

by Joe Kent Grassroot Institute, August 13, 2016

This coming January, keep your eye on the tax hikes.

Hawaii lawmakers will likely attempt to raise taxes next year to pay for new record spending levels. As shown in the graph below, Hawaii’s government is spending more than it ever has before, adjusted for inflation, and the trend is likely to continue.This extra spending will likely mean higher taxes for Hawaii taxpayers, and lawmakers are already making plans to raise the general excise tax, vehicle taxes  and property taxes.

There are many tax increases that are likely to be proposed in the near future:

• Governor Ige already vowed to ask the legislature to raise taxes next year by $70 million for State transportation infrastructure, which will likely mean higher gas prices and vehicle registration fees.
• Rail cost projections are now almost $12 billion, and the deadline given to Mayor Kirk Caldwell will likely prompt him to attempt a property tax hike before Dec 31st. Caldwell is also planning to raise the GE tax to pay for the project.
• The “Cool the Schools” initiative has also come in over-budget, which may inspire a push for another education omnibus bill to raise the general excise tax.
• Increases to the general excise tax for long-term care will also likely be reintroduced this coming legislative session, as it has been for the last two years.
• Proposals which shift tax burden onto the rich may also be reintroduced as well.
• Many public employee union contracts will expire in June of 2017, which will likely lead to negotiations that could be costly to taxpayers.

Hawaii taxpayers may soon feel a heavier financial burden unless the state and counties find better ways of managing the public’s money.

While more taxing and spending may create resources for government to help Hawaii’s citizens, it also decreases wages for hardworking island families in a place where the cost of living is already astronomical. Taxation may also scare many investors and visitors away from the islands.

High taxes could also negatively affect those in poverty, including Hawaii’s growing homeless population. The Hawaii Appleseed Center for Law and Economic Justice has agreed that Hawaii’s general excise tax is regressive, and hits the poorest in our society the hardest.

A better solution to rising taxes would be to take a serious look at cutting spending and increasing transparency. As Hawaii’s state expenditures continue to grow, it’s important to ask where the money is really going, and consider whether it’s time to let island families keep more of their hard earned money.

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