How is your business faring? Have you fully recovered from losses during the recession?
Are you back in growth mode with revenues steadily climbing and offering new jobs? Are you ready, willing and able to absorb more costs this year?
If so, then the following may not concern you. However, if not, we understand and want to call your attention to a few measures introduced this legislative session that will increase your business costs if you remain silent and they pass.
House Bill 1368 introduced by Rep. Roy Takumi intends to increase the general excise tax and use tax for certain, specified services and commodities by 1 percent and direct 20 percent of the increased tax to the Department of Education.
Who does it increase the general excise tax and use tax for? Answer: manufacturers, businesses selling tangible personal property, contractors, businesses making improvements to their land or facilities, theaters, amusements, radio broadcasting stations, sales representatives, service businesses, insurance producers, receipts of sugar benefits payments and other business.
Oh, and the "other business" catch-all includes: "every person engaging or continuing within the state in any business, trade, activity, occupation or calling not included in the preceding paragraphs or any other provisions of this chapter, there is likewise hereby levied and shall be assessed and collected, a tax equal to 5 percent (a 1 percentage point increase from 4 percent to 5 percent) of the gross income thereof. In addition, the rate prescribed by this paragraph shall apply to a business taxable under one or more of the preceding paragraphs or other provisions of this chapter, as to any gross income thereof not taxed thereunder as gross income or gross proceeds of sales or by taxing an equivalent value of products, unless specifically exempted."
Are you awake?
On the front burner is the minimum wage increase supported by Gov. Neil Abercrombie, from $7.25 to $8.75 an hour, beginning Jan. 1, 2014. House Bill 916 and Senate Bill 1147 address this. They increase the tip credit to 30 cents too.
However, these measures also tie Hawaii's minimum wage to the consumer price index for automatic minimum wage increases without legislative action and public input moving forward. This is a significant problem and prevents businesses from having an opportunity to share concerns and the impacts of additional increases before they go through.
Then there is the scheduled unemployment insurance tax increase, going from Schedule F to Schedule G, which is estimated to cost employers $150 on average per employee. Last session, we asked that the UI tax rate to be held at Schedule F for two years, but got one. So, we are back, asking to keep it down again this year. And despite the fact that businesses are still recovering, some legislators feel that businesses should be willing to accept a trade-off for keeping it at Schedule F, like the minimum wage increase or additional workplace mandates that increase costs. We need lawmakers to better understand that by passing heaping higher costs onto businesses they are trading away tax revenue and job creation.
Also add a slew of additional mandates that expand sick leave, add to meal breaks, change the workers' compensation system, increase fee schedules, etc.
We will be keeping chamber members apprised of proposed laws and fighting to keep the cost of doing business down so businesses can survive. However, please do not sit idly by and be silent this session. Silence is viewed as acceptance and may hurt your and many other businesses in the future. Be a part of the solution and join the chamber today!
* Pamela Tumpap is president of the Maui Chamber of Commerce.