The Chamber View: Look within before adding any more fees and taxes
Each legislative session there are a number of bills that seek to increase the cost of doing business and this year is certainly no exception. There is clearly a long-standing belief that businesses can keep paying more and more, absent of economic realities and the challenges they face.
This is evident in the way many business bills are unfairly written, weighted and move forward, without due consideration of their impact on businesses. It is why we continue to ask that an economic impact analysis be included before bills are introduced. While getting such an important tool may sound simple, it is not. And, in the absence of having such important information and a balanced perspective to assist elected officials with decision-making, they often propose solutions that will negatively impact businesses, the economy and job creation. For example, raising the minimum wage right now.
The Chamber of Commerce of Hawaii notes that while only a small percentage of workers make minimum wage, the proposed increase will greatly impact many businesses as they will be forced to raise the rates of many of their employees, which could increase businesses labor cost by up to 10 percent in the first year. It also increases the cost of workers’ compensation, Social Security tax, Medicare tax, temporary disability insurance and unemployment insurance tax as these are based on wages. Many feel that they higher minimum wage, if passed, will result in some businesses having to cut hours or lay off employees.
The governor and lawmakers point to the high cost of living in Hawaii, often referred to as the “price of paradise,” as the impetus for this measure, but in doing so seem to forget their role in this.
Some costs, such as those for shipping, fuel and energy, are outside of their control. But the size of the state government’s price tag and the taxes imposed on Hawaii’s people are well within their control. They are allowing costs to escalate despite the recession, slow economic recovery and need for jobs. Individuals and business owners have had to make significant cuts to live within their means over the last several years, yet the state budget continues to rise and new programs are proposed when simply funding existing programs remains a challenge.
In fiscal years 2012 and 2013, Hawaii lawmakers approved an operating budget of $21.9 billion, equating to an 8 percent increase – or $800 million more -each of these years over fiscal year 2011.
Where did the increased funding come from? Members of the House and Senate created new taxes and fees that directly and indirectly hit every one of us to cover $600 million of it.
They passed tax increases on business, raised vehicle registration costs, taxed higher incomes more and hit subcontractors, subleasors and Hawaiian Airlines by taking away general excise tax exemptions. So while you may not be in these groups, you pay more when your need their products or services.
This year’s biennium budget proposed by Gov. Neil Abercrombie is for $23.8 billion, up another $1.9 billion, or nearly 9 percent.
Before we increase costs for our customers in business, we first must look within to see how we can reduce expenses and be more efficient.
We know that higher costs create real hardships for our valued customers. This option appears to be the last considered when it comes to government.
Instead of trying to tackle our grand challenges by hitting businesses and different groups over time, ask state lawmakers to hold all harmful bills, prioritize existing programs before adding new, and live within our means so that we do not have to raise taxes and fees when people and businesses cannot afford it.
* Pamela Tumpap is president of the Maui Chamber of Commerce.