Tax Foundation on verge of closing
By Bruce Dunford
Associated Press
The 49-year-old Tax Foundation of Hawai'i, seen by many as an independent voice of researched reason in the politically charged arena of tax policy, may be shutting down.
"Our board needs to make that decision in 45 days because the amount of money we have left will only last 45 days," Lowell Kalapa, president of the nonprofit tax research group, said yesterday.
Kalapa said his testimony this year against tax breaks for certain businesses has provoked a campaign to cut off contributions to the foundation which has four employees and an annual $250,000 budget.
"We have run out of financing ... because people don't like people calling their bluff about getting handouts out of government, which basically come at the expense of all taxpayers," he said.
Kalapa said Mitch D'Olier, chief executive officer of Victoria Ward Ltd., is "the prime mover" behind the effort to cut off the foundation's funding.
"He didn't like our opposition to the commercial (development) tax credit bill, which we consider bad tax policy," Kalapa said, noting Victoria Ward's multimillion-dollar redevelopment in Honolulu's Kaka'ako area would be eligible for a sizable tax break if it passes.
D'Olier acknowledged withdrawing support from the foundation, but denied he has encouraged other businesses to do likewise.
"We didn't continue our $2,000-a-year contributions," he said. "That's what we did. I don't understand why I'm being singled out as the reason Tax Foundation is having trouble."
As for why other companies might also drop their support, "generally, it's tough economic times and businesses are spending more carefully," D'Olier said.
"In relation to tax policy matters and whether the state should grant tax incentives for the kind of business it wants to encourage, we have a difference of opinion with Mr. Kalapa," he said. "I think there should be government incentives for the kind of business that we feel would be good for Hawai'i."
The foundation should focus on an educational role of explaining the positives and negatives of various tax proposals and not be promoting a particular policy on tax legislation," D'Olier said.
Kalapa is no favorite of Gov. Ben Cayetano, who said the Tax Foundation has failed because it is too Republican and "very one-sided."
Senate Republican Minority Leader Sam Slom said Kalapa is just as likely to oppose GOP proposals, such as getting rid of the excise tax on food, rent and medicine, as those of the Democrats to double the tax on liquor.
State Tax Director Marie Okamura said an end to the foundation will be a loss in the legislative process.
"We don't necessarily agree on issues, but (Kalapa) provides perspective from the taxpayers' standpoint," she said. "I think the Tax Foundation does provide a very useful purpose."
It's not the first time the Tax Foundation has been in financial trouble and on the verge of closing. In 1997, a last-minute campaign that raised $68,500 in contributions kept the organization alive.
