Hawaii’s Revenues Are Disappearing

by Pearl Hahn

Hawaii’s Department of Taxation reported that revenue collections were down 5 percent in July and August compared with the last fiscal year, and the Council on Revenues reduced its forecast last month from zero growth to a 1.5 percent drop. Hawaiians have no one other than their elected officials to thank for passing a slew of tax increases that are pushing us deeper into debt.

Taxes come in various forms and are often disguised under elaborate labels, but their intent and effect is always the same— to punish work, productivity, and investment.

Time and time again, Hawaii continues to suffer from the consequences of taxation. This past legislative session, our lawmakers raised taxes on income, tobacco, cigarettes, the transient accommodations tax (TAT otherwise known as the hotel room tax), and the real estate conveyance tax.

These taxes have thus far deterred and reduced economic activity, yielding lower revenues. Contrary to popular belief, high tax rates yield less revenue due to reduced productivity. While taxing the rich is a common rallying cry, increasing taxes only encourages incentives to conceal income to protect profit margins.

Lower tax rates are essential, and the Legislature should resist any new measures to increase taxes. It is also critical that the state government drastically reduce its level of spending. If we continue along our current path, the amount of wealth in the state will continue to shrink.

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