What Hawaii Businesses Really Need

by Keli'i Akina, Ph.D., President / CEO, Grassroot Institute of Hawaii

How much do Hawaii lawmakers really want to help businesses thrive?

On the surface, it seems like a lot. There are innovation grants, a trade expansion program, an investor center, tax incentives and at least three kinds of special zones: enterprise, opportunity and foreign trade.

And yet, WalletHub in January ranked Hawaii 42nd among the 50 states as a place to start a business. And last October, the national Tax Foundation ranked Hawaii 42nd in terms of its state business tax climate.

So why is Hawaii perpetually ranked as one of the least business-friendly states in the nation despite offering so many grants, incentives, credits, zones and other programs intended to do the opposite?

Maybe a better question is: “Do these special government programs actually make a difference?”

They might help some businesses — especially those in the industries favored by politicians. But overall, these attempts to be helpful are not what local entrepreneurs really need.

What they need is what every business needs: a friendly tax and regulatory climate along with a growing economy that will let every industry thrive.

Unfortunately, the same politicians who keep coming up with these new incentives for their favored industries also keep ramping up the tax and regulatory burden on local businesses.

According to the Cato Institute’s “Freedom in the 50 States” index, Hawaii ranks 44th in terms of regulatory freedom, and is beginning to challenge New York as the least free state overall.

The report notes that Hawaii's biggest deficiencies are in the areas of fiscal policy, labor market freedom and land-use restrictions, but regulations in healthcare and insurance also come in for criticism.

I've been hearing for years that these state and county business incentives are intended to help Hawaii diversify its economy beyond tourism, but you can't engineer an economy from the top down. There are no special government incentive programs that can solve all of our economic woes.

Instead, what Hawaii's business climate really needs is fewer regulatory hurdles, lower taxes and the freedom to grow.

E hana kākou! (Let's work together!)