Bad idea from Hawaii mayors

Government is not supposed to be shielded from the ups and downs of a free-market economy.

Mayors, governors and presidents are supposed to manage their administrations in good times and bad, just like leaders in the private sector must. It should mean that when the economy stalls and revenues fall, those elected officials prioritize government functions and the less important give way to the essential.

The Hawaii Council of Mayors refuses to accept that. They are asking the Legislature to give the mayors leeway to increase the general excise tax by up to 1 percent in their respective counties.

Working people and businesses need fewer taxes in recessionary times, not more.

News reports from the opening of the state Legislature Wednesday said the proposal would not necessarily mean an increase in the GET, but it would give the mayors “one more tool” to deal with revenue shortfalls. We don’t know any handyman who puts a new tool in his sack and never uses it.

If the Legislature caves and gives this authority to the counties, it is not a question of will the GET go up, but when. And, by the way, a 1 percent increase in the GET is actually a 25 percent increase in the tax. It is currently 4 percent.

A business that now pays $100,000 in GET would pay $125,000 on the same amount of sales. An individual who pays $2,000 per year in GET for goods and services would pay $2,500 if the rate went to 5 percent.

A much more sensible way to get more money to the counties was presented by House Speaker Joe Souki. He advocates lifting the cap on the counties’ share of the transient accommodations tax. He proposes covering the resulting state shortfall by taxing Internet sales.

As we have pointed out previously, the state does not collect GET on Internet sales, giving e-tailers a decided advantage over brick-and-mortar stores here. Souki’s proposal would get rid of that inequity and give the state some revenue from online sales.

* Editorials reflect the opinion of the publisher.