GET Increase Dies Again — Hooray!

Rick Hamada
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Wednesday - April 13, 2011

The Fat Lady sang her song this past week in the state Senate Ways and Means Committee when, by a vote of 9-5, the initiative to increase the general excise tax was squashed.

And, no, it wasn’t because the Fat Lady fell. It’s because some brave Democrat souls stood up to the leadership of their chamber and truly represented the will of the people.

The increase of the GET, the most onerous tax because of its pyramiding and regressive effects, is the third rail of Hawaii politics. This is the second time an increase appeared to be a done deal when, in fact, it failed to materialize. In 1998, a proposal to increase the GET by 3 percent also was defeated in the Senate. Led by then-state Sen. Randy Iwase and state Sen. Sam Slom, the vote defied the support of Gov. Ben Cayetano, organized labor and the largest bank in the state.

Why the defeat of an increase in the GET coming a generation apart? The resounding voice of the people was heard by legislators who put the constituency above party politics.

This was manifested at a raucous WaM committee hearing, where concerned citizens voiced their displeasure with this tax increase. There were supporters of the increase, primarily those in the human services field who feared fundamental services to the poor would be cut. The counter argument is the demand of government to prioritize its spending. Clearly, the majority of the WaM committee acknowledged this need, too.

According to Democrat Sen. Donovan Dela Cruz, he and his colleagues received incessant phone calls, emails and faxes vastly opposing the increase of 1 percent.

By the way, an increase from 4.5 percent to 5.5 percent reflects an actual GET increase on Oahu of 22 percent, while the rest of the state stood to withstand an increase of 25 percent. You, as the consumer, would have paid the most as manufacturers, distributors and retailers invariably pass this cost increase on to you.

WaM chairman David Ige emerges from this as a chairman who could not rein in the members of his own committee. To deliver only five of 14 votes may signal a lack of leadership among his peers, and he may find himself removed as a consequence.

There is one very real difference in the fight against the GET increase this year and the one in 1998. Back then, the governor and members of the House were in favor of the increase as part of the ERTF strategy. However, this year, Gov. Abercrombie and especially House Speaker Calvin Say had expressed that an increase did not get their support. House Majority Leader Blake Oshiro had said many times on my radio program the he would not support an increase in the GET. It appears that this consistent position is standing firm.

The bottom line is the bottom line: Hawaii is in dire financial straits, and this administration and Legislature must find a way to strike a median in meeting the state constitutional requirement to balance the budget, and to not punish the most heavily taxed people even more during this economically difficult time.

I hope nobody will ask the Fat Lady back to the stage.

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