by Lowell L. Kalapa, Tax Foundation of Hawaii

Well, lawmakers are off and running, promising to exercise care in handling the state’s fragile economy, surrounded by stories of struggling families trying to make ends meet as they lose their second job or see fewer hours.

But things have not changed at the State Capitol. Both the state administration and lawmakers have plans to spend even more all in the name of “jump starting” the economy. At the same time, state tax revenues continue to miss forecasts on which lawmakers must base their spending plans. So, where will lawmakers get the money they want to spend?

What taxpayers should remember is that in the past few years, lawmakers have gone back to the well time and time again to raise taxes that most taxpayers do not see yet feel the pain of every day. From the higher price for the bag of rice to the larger tab to register the family car, taxpayers have been taken to the cleaners and there is almost nothing left. Will lawmakers again resort to raising taxes to balance the budget?

Although lawmakers profess that they will take great care in handling the state’s economy, the bills that have already been thrown in the legislative hopper certainly do not reflect that sentiment. While proposals to raise the obvious taxes like the personal income tax or the dreaded general excise tax are absent, other measures to impose even more burdens on the economy have been introduced. Proposals include those that would impose new regulations on employers, additional hoops through which new developments must jump, and requiring businesses to insure against identify theft of their customers and employees.

While lawmakers may believe that all of these proposals will “protect” their constituents, they seem to overlook the fact that they will merely impose yet another cost on taxpayers and the economy that can only make it more difficult to recover from the struggle of a sluggish economy. For the average taxpayer who has not tried to build a building, open a store or just run a business, it may seem hard to fathom that the current list of rules and regulations imposed by laws already on the books make it difficult to survive.

Many an eager young entrepreneur wanting to start a new venture in Hawaii has been slammed with the slew of requirements, from permits to filling out dozens of forms just to open the doors of a new enterprise. So while lawmakers think that they are helping to “grow” the economy, they have instead managed to make it almost impossible to succeed in Hawaii. And while those very lawmakers bemoan the “brain drain” of Hawaii’s best and brightest leaving the state never to return, they have no one else to blame but themselves, for they have made the laws that have driven those bright entrepreneurs from the state.

So instead of creating a nurturing environment to help businesses grow and encourage new entrepreneurs, the laws of the state and counties have made it difficult not only to start up a business but also to stay in business and survive. And why? It seems that lawmakers seem to view businesses as nasty animals trying to “rip-off” their poor constituents who they think can’t fend for themselves. Businesses are seen as the “enemy” which must be kept in check by lawmakers. For those who don’t believe so, one only has to look at the taxes businesses pay, the labor regulations with which they must comply, the permitting hurdles which must be straddled to build out their offices or for stores to deliver their products or services.

What lawmakers don’t seem to realize is that it is the businesses of our community that provide the jobs that their constituents need. Businesses provide the payrolls that put money in the pockets of consumers who spend that money in the marketplace and on which workers pay taxes to keep government running.

What lawmakers do seem to realize is that businesses have the money that they need to run their campaigns. As a result, businesses are the “sucker” targets for campaign contributions. For example, one special interest is sponsoring a $500 campaign fundraiser for a legislator with the obvious goal of insuring that their special interest legislation makes it through the legislative gauntlet. With that kind of money, how can that legislator turn down the legislation? Yet, in the long run, that proposal will hit all taxpayers in the pocketbook.

When lawmakers talk about caring for the “fragile” economy, one has to greet that with cynicism as the legislative track record is littered with laws that merely raise the cost of living and doing business in Hawaii.

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