Roll back

December 22nd, 2011
By

David Chang, the chairman of the state Republican Party, wants Gov. Neil Abercrombie and majority Democrats in the state Legislature to roll back the revenue increases used to balance the state budget now that the state is anticipating a surplus.

The primary source of new tax revenue is from the temporary suspension of general-excise tax exemptions on certain business activities. Chang said businesses are in many cases passing the costs of losing the tax exemptions on to consumers.

From the chairman:

Governor Abercrombie’s budget contains a $199 million surplus by the end of this fiscal year and $235 million by the end of the next fiscal year.  Where did this surplus come from?  From Hawaii’s hard-working families and businesses who had to shoulder an estimated $600 million in additional taxes over these two years, due to the tax increases passed this year by the Abercrombie administration and the legislature.

Out of that $600 million  tax increase, about $400 million is estimated to come from increased general excise taxes on contractors, businesses that sublease, airlines and others – most of which gets passed-on to Hawaii’s consumers and businesses as increased costs.

The impact of the tax increases on the state budget was acknowledged by the Hawaii Council on Revenues (COR) at its latest meeting on September 6, 2011.   COR increased its forecast for State General Fund tax revenue growth for the current fiscal year from 11.0 percent to 14.5 percent and for the next fiscal year from 6.0 percent to 6.5 percent, noting “[T]he increases in the forecasts for tax revenue growth in FY’s 2012 and 2013 were mostly due to new tax laws that have gone into effect this fiscal year. Without the expected revenue increase of the new tax laws the forecast for FY 2012 would have been lowered to 9.5 percent, due to uncertainties about the economy and about the number of visitors [emphasis added].”

In this weak national and state economy, working families and small businesses are struggling to make ends meet or to make payroll.  Increasing costs, such as additional taxes, only makes things worse.  Now government wants to spend that additional tax.  We believe instead, the Abercrombie administration and the legislature should roll-back the tax increases and government should live within its means.

Republicans believe that the best budget surpluses come from increased efficiencies in government services and lower taxes and regulatory burdens that allow economic activity resulting in increased government revenues.  Only when we grow the Hawaii economy, can our working families achieve an increased standard of living.

5 Responses to “Roll back”

  1. Goober:

    Seems the republican party is counting their chickens before the egg hatches. I will believe only if there is a surplus. Like many who live pay check to pay check. Government lives fiscal year to fiscal year. What if there is no one working next year? No taxes and so the remaining 1% will pay for the other 99%.


  2. Manoa_Fisherman:

    The GOP is doing its job as the opposition to correct the administration’s efforts of painting too rosey a picture of the financial status of the State. The test of the administration’s assertions will be coming up as the State Legislature reviews the budget in comparison with the Council of Revenue’s projecions and tax collections. We will soon see who is right on these issues. My guess is that both are correct to a certain extent.


  3. OahuSophist:

    It was really only a matter of time before the state saw a surplus again. While we didn’t really know when it would happen, I think we all believed that, eventually, the economy would improve and tax revenues would increase again.

    I see a couple of things in Chang’s statement.

    First, I see this as an attempt to score some quick and easy political points for the Republican Party and their Senatorial candidate, Linda Lingle. It’s so easy to cry government excess, big government run amok, and the like in an election year. Nobody likes taxes and as people are still feeling the economic pinch, maybe particularly so during this holiday season, and the new Republican Chairman is trying to gain some ground by appealing to people on that level. What’s more, I think it seems maybe just a bit premature. With the COR scheduled to release an updated projection in just a couple of weeks, Chang appears, in my opinion, to be jumping the gun.

    Secondly, his call for refunds seems to ignore the State’s financial reality. It’s been operating on life support (because Governors past and present, as well as the legislature refused to take reasonable action to increase the state’s revenue) for a few years now. With furloughs, cuts to government employee salaries, cuts to benefits and services throughout the state, it was inevitable that the state would, at some point, have a surplus.

    Rather than allowing those current levels remain, which Republicans would LOVE, the Abercrombie Administration and the Legislature should be just a little more fiscally responsible. Let’s replace the moneys taken from the Hurricane/Rainy Day Funds. Let’s work to restore services and programs that have been cut to the bone, or dismantled altogether. Let’s begin to restore salaries and benefits to hard-working government workers.

    Until we’re back to where we were before the financial crisis, I think we need to continue to take the long view of restoring services, salaries, and programs before we start talking about tax refunds. But then again, it has always seemed pretty clear that the Republican Party isn’t really interested fiscal responsibility, or helping the less fortunate (or even working-class people), so much as they’re interested in SAYING they are.


  4. Kolea:

    @OahuSophist,

    You wrote:

    “the Republican Party isn’t really interested fiscal responsibility, or helping the less fortunate (or even working-class people), so much as they’re interested in SAYING they are.”

    Heck, I think the ongoing debate in Washington over whether to extent the payroll tax cut shows the GOP doesn’t give a dam about MIDDLE-CLASS folks, much less “working class” ones. They were refusing to extend the tax cut for two reasons: 1) They said it “does not create jobs;” and 2) they said it needed to be paid for with cuts elsewhere in the budget.

    On the other hand, let’s look at what they say about continuing the tax cuts on millionaires. They claim THOSE cuts DO “create jobs.” In fact, they have gone so far to insist high-income people no longer be called “rich,’ “wealthy” or “high-income.” They insist on calling them “job-creators,” even if there is little evidence they are actually creating any jobs!

    The economic evidence is actually stronger that jobs can be created through increased consumer demand, such as that which arises by allowing employees to keep more money in their paycheck. It is almost all spent immediately, creating demand for goods and services. A smaller portion of the income of wealthy people gets plowed back into the economy. More is put into savings. A significant portion of investment is now overseas. Tax cuts for the wealthy actually create FEWER jobs than for working and middle-class folks. But Republicans REFUSE to see that out of blind FAITH in their ideology.

    Secondly, they do not demand that tax cuts for the rich need to be offset by cuts in spending–a very different standard than that they apply to tax cuts for middle and working class employees.

    They have exposed themselves as slavish sockpuppets for the super-rich who own most of this country, abandoning even their pretension of looking out for “middle-class” people. The GOP Senators are marginally less crazed than the run-amuck GOP members of the House and fear the Republicans will fail to seize control of the Senate in 2012 if the House members do not control their madness.


  5. Goober:

    The gooney neocon has spoken. The 1% are in total control. Money talks and does the walk. The other 99% just talk. Neither party can create jobs.


Leave a Reply