Stop More Tax Hikes in their Tracks!

Even though government spending has been steadily increasing, lawmakers insist that the multi-billion dollar deficit is a revenue problem. As such, they're trying to get their hands on all the tax dollars they can in order to continue to finance a bloated and wasteful government apparatus.

An income tax increase currently working its way through the Legislature would kick in at $150,000 for individuals, well below the income threshold of many of Hawaii's small businesses. With the state's job providers already struggling to survive, a tax hike would kill off whatever's currently left of their bottom line. Not only would hiring freezes soon follow, but layoffs and business closings could be close behind.

The cigarette tax hike would amount to $1 per pack over the next two years. This is among the most regressive type of tax, as the majority of smokers come from low-income households. It would also effectively serve as a double-whammy for retailers already pinched by the income tax hike, because their receipts from cigarette sales would decline.

The tax on the sale of real estate valued at over $2 million would be hiked under the plan. This constitutes a strong disincentive for the buying and selling of houses in the midst of a collapse in the housing market. And in a state where the economy hinges on the tourism industry, the two-year, 2 percent boost in the excise tax on hotel rooms is economically suicidal.

It's important to contact the Governor and Legislature now and tell them enough is enough. No new tax increases!

Sample Letter for Campaign

Subject: Say no to any and all tax increases

Dear [ Decision Maker ] ,

I urge you to oppose every tax increase on the table for Hawaii's budget. Now more than ever, as a voter and a taxpayer the last thing I need is to watch more of my money feed an even bigger government.

The cigarette tax increase amounts to an extra-heavy burden on the poor, and it's an unpredictable revenue source. Higher income taxes will hit small business particularly hard. Hiking taxes on real estate sales will continue to batter a devastated housing market, and a hotel tax hike will hurt our ailing tourism industry.

Please take a stand for me, and for all Hawaii taxpayers. Say no to any and all tax increases.

Sincerely,

Campaign Launched:
April 30, 2009

Background Information

The budget deficit in Hawaii is projected at $2 billion. This shortfall can be largely attributed to the relentless rise in government spending -- a whopping 61 percent over the past 10 years. But politicians in Honolulu are focused on taking in as much revenue as possible by hiking taxes on small businesses, the poor, home buyers and its largest industry.

Lawmakers will present a variety of tax increases to Gov. Lingle, including hikes in the personal income, hotel accommodations, real estate conveyance, and cigarette taxes. A proposal to boost the state excise tax (a gross receipts tax) has also been discussed. Despite a painful recession, it seems that no sector of the economy is safe from predatory legislators.

One of the provisions is an increase in the top personal income tax rate to the highest level in the country. Because many small business owners consider and report their profits as personal income, this proposal has the potential to ravage Hawaii's economy. With the state's unemployment rate at 7.1 percent, it is vitally important to enact policies that encourage hiring. This tax hike will achieve exactly the opposite result.

In keeping with their anti-business group-think, lawmakers have approved an increase in the tax on hotel rooms from 7.25 percent to 9.25 percent over two years. Hawaii's economy is dependent on the health of the tourism industry, and policies that effectively raise room rates will send an unfriendly message to potential visitors. In February, hotel occupancy rates dropped to their lowest levels in 18 years. With leisure-seekers from the continental 48 looking to cut costs, now is certainly not the time to make the Aloha State a less viable vacation option.

Tourists aren't the only group with "tax me" targets on their backs. Hawaii citizens will be subject to the highest cigarette tax in the country if the Legislature has its way. A dollar-per-pack hike in the cigarette tax would hit Hawaii's working poor the hardest. Because the tax is not based on ability to pay, it consumes a higher percentage of poor people's income. Low-income citizens are much more likely to smoke than those who earn more than the state's median income.

Further, revenue projections attached to tobacco tax hikes are incredibly unreliable as smoking continues to decline. Between 2003 and 2007, state excise taxes on cigarettes were increased 57 times. Only 16 of them met their revenue estimates. Because of this trend, in the near future Hawaii's taxpayers can expect an associated budget deficit and a whole new conversation about which taxes to hike further.

In this recession, Hawaii taxpayers need to hold on to as much of their money as possible. Contact Gov. Lingle today and urge her to veto ALL tax increases. Then contact your legislators and tell them it's time to take a stand for taxpayers and uphold those vetoes.