Posted on: Thursday, March 6, 2003

EDITORIAL
Excise tax-hike plan offers rare opportunity

The state Senate has approved and sent to the House a bill that has two serious strikes against it: The voters don't want it and the governor has said she'll veto it.

From that unlikely prospect, however, we see an opportunity, with not all that much tweaking, for lawmakers to turn it into an idea that will compel the enthusiasm of the voters and the governor alike.

The bill would increase the general excise tax from 4 percent to 4.5 percent.

We don't blame legislators for keeping the idea alive for now, because slipping tax revenues means they increasingly are looking at cutting services to the people who need them most.

But as a means to help lawmakers balance the budget, a tax hike is a non-starter. Senators no doubt thought the bill had a chance because of a Honolulu Advertiser Hawai'i Poll that suggested that state residents were willing to pay more in taxes if they believed that government has developed a good solution to the problem of (A) making needed repairs to public schools and (B) improving the quality of education in public schools.

There are light years of difference between that sentiment and the Senate bill, which would dump more money into the DOE budget for unspecified purposes, thus freeing up other funds to balance the rest of the budget. Taxpayers won't buy that, and neither will the governor.

But there's a way to amend the bill that could make it fly. We'd suggest that the additional tax revenues raised from the increased general excise tax be specifically earmarked for needed education improvements that don't exist today such as reducing the class size in grades K-3, or putting new textbooks in the hands of each high school student, or air-conditioning each campus that needs it.

In other words, if the proceeds from the proposed excise tax hike were directed exclusively to tangible education improvements, we think voters would respond favorably and Lingle would have a hard time justifying a veto.

If lawmakers decide to move a tax hike forward on this basis, we'd hope they'd also look closer at the relative regressivity of the excise tax. Senators have already addressed this in part by a slight offset for residents of a $100-per-person food-tax credit. But if we must increase taxes, let's make sure the burden falls mainly on those who can handle it.