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.