The Maui Chamber of Commerce continues to submit testimony in support of House Bill 2096 House Draft 1 relating to employment security, aka the unemployment insurance tax bill.
We support this bill because Hawaii's employers have been bearing an extremely heavy burden since the past rate hike and moving to a new tax schedule, as planned for this year, will be devastating to many businesses. On average, it could amount to an additional expense of $550 per employee.
Ali'i Kula Lavender shared this testimony: "Based off of the proposed increase and our number of employees, our excess wages will rise by $4,600 quarterly ($18,400 annually). This will, in turn, inflate our net excess wages significantly, our contribution rate would spike and we would experience increases in the amount we owe for contributions due, as well. While we already face considerable challenges doing business in Hawaii, increases in unemployment insurance tax will surely diminish our ability to meet the everyday hardships of increased costs in transportation, increased costs of product components, lessened spending on the part of customers and the resulting heightened competition among retailers and agribusinesses, such as ours."
In addition, we are asking legislators to keep the unemployment insurance tax rate at the current tax schedule for a minimum of two years, not just one, because economists predict a very slow recovery and we are not out of the woods yet.
Insolvency is still a looming threat for some businesses. Others are still doing far more with less people and fewer resources, while being hit with higher expenses from numerous fronts (as highlighted in the above testimony). This reality cannot continue; it is not sustainable. We must bring down the cost of doing business in Hawaii.
The Milken Institute's last Cost-of-Doing-Business Index (August 2007) reports that Hawaii continued to have the highest cost-of-doing-business in the nation, further increasing its year-over-year costs.
The index shows that Hawaii's wage cost is 8.1 percent below the national average, but is greater than 28 other states. However, Hawaii far exceeds the national average in every other category by:
* Tax burden, 62.1 percent above average.
* Electricity cost, 160.7 percent higher.
* Industrial rent cost, 169.5 percent above.
* Office rent cost, 40.4 percent higher.
This equates to a cost of doing business that is 51.5 percent greater than the national average (rising from being 43 percent higher in 2005).
Why is this important? Because the Cost-of-Doing-Business Index indicates each state's comparative advantages or disadvantages in attracting and retaining businesses. States with a low cost of doing business have, on average, greater job growth than those with high costs. It also shows the tremendous challenges that businesses in Hawaii face.
House Bill 2096 House Draft 1 may be heard as early as Monday by the Judiciary and Labor committees. So, there is time for you to send in testimony in support of the measure. Please go online to www.capitol.hawaii.gov/submittestimony.aspx, type in HB2096 in the search box and click submit. It will take you to a page that will show the hearing notice and allow you to submit testimony by typing it in a box there or by uploading a document from your computer. And, while you are at it, please ask lawmakers to create a "pro-business environment" in Hawaii, as well, so that we can generate desperately needed jobs and return Hawaii to a place of economic prosperity.
Mahalo for your support of Maui's small businesses.
* Pamela Tumpap is president of the Maui Chamber of Commerce.
