COMMENTARY
Your tax burden just keeps getting worse
By Cliff Slater
It is about time that we came clean with the voters and changed from a general excise tax to a straightforward sales tax. We are the only state in the U.S. with a GET; all the others have a simple sales tax.
According to the Tax Foundation and the National Federation of Independent Business, it would take a 12 to 16 percent sales tax to generate the same revenues as our 4 percent GET.
Hawai'i residents generally refer to our GET as a sales tax because that is what is visible. They do not see the insidious pyramiding effects of charging tax on services. For example, the grocery store pays rent, buys cleaning services, accounting services, maintenance companies, among many other services, on all of which the store pays the 4 percent GET and then passes it along to you.
In addition, there are the cleaning and office and store supplies, which the state also taxes and the store passes along to you.
Nothing demonstrates the dishonesty of this tax more than recent legislation allowing counties to increase the GET by 12.5 percent. Legislators tried to portray this as "home rule."
In fact, counties could have easily raised the county gasoline tax by 55 cents, or increase the property tax by 45 percent, either one of which would yield the same amount of revenue as the GET increase. However, voters would not stand still for such increases — they are too visible.
That it is not "home rule" is obvious since three out of four counties have rejected the "home rule" that the bill supposedly offers. That only makes sense if it is not "home rule," but instead, a tax increase — pure and simple.
Having lost the "home rule" argument, legislators then tried to say that the advantage of using the GET was that visitors pay 30 percent of it. However, the amount is closer to 20 percent, according to the Tax Foundation. And visitors also pay a considerable portion of resort property taxes and, in addition, residents can deduct property taxes from federal taxes.
Had the county chosen property taxes as the tax-increase vehicle, the net after-tax cost to the resident community would be less. And property taxes are progressive taxes, whereas the GET is a highly regressive tax in that it falls more heavily on the less affluent.
The sole purpose of using the GET as the tax-increase vehicle is to hide from the voters the size of this tax increase — the largest in the state's history.
In addition, this year's endless procession of raised conveyance taxes, vehicle weight taxes, sewer fees and property taxes adds up to over $500 for the average family.
There is an old saw about the way to boil a frog is to start with cold water and then very slowly apply the heat so that the frog does not notice until too late.
Nowhere is this more applicable than the way we Americans have gradually become inured to the steady growth in taxes imposed by our various federal, state and local governments.
By 1902, tax collections were up to $975 per capita (allowing for inflation) and today it has crept up steadily to $13,200.
We sometimes forget that our Founders began the fight for independence over a tax on tea. Today, the fight seems to have gone out of us. As one commentator puts it, "Give the average citizen the choice of their liberty or a ham sandwich — they'll take the sandwich."
Hopefully, Generation Y will be different.
Cliff Slater is a regular columnist whose footnoted columns are at www.lava.net/cslater.
