As another legislative session is about to be convened, let’s look back at some of their follies over the past few years as they managed to manipulate taxes and fees to spur on taxpayers to change their behavior.
Over the past decade or so, lawmakers have managed to misuse and abuse the tax system by offering incentives for taxpayers to undertake some activity that financially really did not make any sense or used the tax and fee system as a stick to punish what was deemed to be undesirable behavior. In both cases, this represented nothing more than poor tax policy and ended up shifting the burden of taxes to the middle income and poor.
As noted earlier, the tax incentive strategy utilizing primarily tax credits handed out tax dollars with no accountability or documentation of whether the tax credits were a success or failure. Instead, it made those folks who had the money to undertake many of these activities rich while those who could not afford to invest in high technology, alternate energy or film-making had to pick up the tab for running state government. To a large degree, it was lawmakers who created many of the abuses with these tax incentives, adopting poorly drafted legislation or in some cases deliberately allowing the statue to be loose and vague.
In their enthusiasm to just grab more money, lawmakers made sure some of the highest conveyance tax rates were imposed on non-owner occupied residential property. Unfortunately, they failed to understand that such property usually ends up being rented and often includes multi-family complexes. In the minds of lawmakers all they could see is some foreign investor buying a multi-million dollar mansion. Even the higher rates on the conveyance of commercial property forced owners and purchasers to find other ways to convey those properties by selling the company that owned the property and not the property itself.
There was the dollar slapped on all petroleum products in the name of funding alternate energy initiatives that instead went to the general fund and the county economic development councils. It is anybody’s guess just how that money is being spent and certainly worthy of a state audit.
Speaking of audits, consumers recently learned of the lack of oversight and the possibility of fraud in the state’s beverage deposit program. Adopted in the belief that the nickel per container would get consumers to return containers to get their deposit back has resulted in a steady income stream for people who collect these cans from the highways and byways and take them to the recycling centers. The viability of this occupation certainly raises a question about whether or not the fee has really changed consumer behavior.
Then there are those proposals that were introduced in recent years and may still be introduced that may yet add more fees on consumers. Last session the health department wanted to slap another dollar on your car registration fee to fund the parking program for the disabled. They told lawmakers that by doing so it would save the general fund a half million dollars as that program was then being funded out of the general fund. Of course, they discreetly failed to point out that there are more than a million cars registered in the state and in passing this they would have doubled their budget.
There was the proposal to have retailers charge 10 or 20 cents for each plastic bag used to bag their customers’ purchases — this despite the fact that at the time three of the four counties had already enacted bans on plastic shopping bags. But where was the money to go? Certainly not to fund a litter program to address the problem of discarded plastic shopping bags. Instead it would have gone to a forestry program so general funds being used for that program could be freed up for some other extraneous program. It was nothing more than a money grab.
Now some lawmakers believe they can solve the problem of childhood obesity by levying an added tax or fee on all sugary beverages for after all isn’t that what kids drink? The idea was introduced into the legislative hopper a couple of years ago. Unfortunately, that strategy represents a myopic approach to the problem of childhood obesity. Even the nation’s first lady knows better than that! Her approach is aimed at the key reason why this generation of youth has packed on the pounds, and that is the lack of physical activity.
If lawmakers want to “punish” the bad habits of kids that contribute to childhood obesity, perhaps they should start with the number one preoccupation of kids today, the fascination with their iPods and iPads or cell phones and tablets as they sit in the corner of the playground texting their friends and acquaintances instead of slamming that tether ball around the pole or climbing on the jungle gym. A $200 fee on such handheld devices might just get parents to think twice about giving their kids these devices. Oops, let’s not give lawmakers another bad idea!
• Lowell Kalapa is president of the Tax Foundation of Hawai‘i, a private, nonprofit, non-partisan, educational organization established to research tax issues. Visit www.tfhawaii.org for more information.
