Our Money-grabbing Government

Rick Hamada
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Wednesday - April 30, 2008

I commented last week on the challenges most families are facing with higher prices in our grocery stores. I am continuing the call for the state to eliminate the General Excise Tax on food consumed in the home.

It is appalling that our government continues to profit on our need to eat. It is also unacceptable that our state profits by levying taxes on medicine (OTC and prescription) and rents. When you get sick or seek shelter, the government is first in line to assess taxes upon the most basic and fundamental needs of all citizens.

The GET is the most regressive tax impacting those of lower incomes more than anyone else. Our political leaders should be ashamed each day that goes by with such a financial punishment of the most vulnerable of our society.

The pain also is felt at the pump. It’s no secret the price of gasoline has nearly doubled in the past five years. The average price of a gallon of regular unleaded in 2003 was $1.96 on Oahu. The average price today is $3.71. Ouch! I understand the reasons given for the escalating cost of fuel. As of this writing, the price per barrel of oil is $119. There was a time when we shuddered at the prospect of $50 per barrel.

Unfortunately, experts believe the price of crude will continue to increase and major producing nations are indicating there will be no increase in yield. The demand, however, is unprecedented. Countries such as China, India, Pakistan and other developing nations are using more petroleum than ever before, thereby competing with the greatest consumer, the United States. Reduced production coupled with increased demand led to higher prices.

Meanwhile, ethanol production has put a burden on our food supply with more crop space dedicated to fuel rather than animal feed or consumable produce. I acknowledge that energy alternatives are necessary, but that conversation is for another day.

A frequent criticism for high gas pricing is directed at the oil companies. Price gouging and illegal profit taking are among the charges. However, we should consider the following when pointing an accusatory finger at Big Oil:

* Oil companies invest in research, exploration, drilling, capturing, transporting, refining, transporting (again) and retailing a product which did not “exist” until it was discovered and brought to market for our use.

* One of the “Big Oil” companies, Exxon Mobil, reported profits of 10.7 percent for 2007. There were caterwauls from Congress calling for investigations into the “obscene” profits taken by oil companies. Microsoft reported an overall 2007 profit of 26 percent. Perhaps we should launch an investigation of the price gouging undertaken by computer software companies, too.

* Oil companies paid more than $2.2 trillion in taxes to government in the past 25 years. This translates into three times more taxes paid than profit taken over the same period of time. (Bureau of Economic Analysis/U.S. Department of Energy)

* Oil companies average 10 cents per gallon of gas in profit. (The Oxford Club, www.investmentu.com)

There is no doubt that our consumption in America (and for that matter, around the world) translates into tremendous sales at the pump. Fine. I have no problem with profitability in a capitalistic society. But I find it hypocritical that government is pursuing litigation based on excessive profit taking when the greatest culprit is the government itself.

Consider this when contemplating the high cost of gasoline:

* The federal government charges 18.4 cents a gallon in tax.

* The state of Hawaii charges 17 cents a gallon in tax.

* The City and County of Honolulu charges 16.5 cents a gallon in tax.

* The GET collection on Oahu for a $3.70 gallon of gas is 17 cents.

* The total amount of taxes paid by the Hawaii consumer for a gallon of gas is 70 cents per gallon.

The government does not research, explore, drill, capture, transport, refine, transport (again) and retail petroleum products. The oil companies take (on average) 10 cents in profit per gallon of gas. The government takes 70 cents per gallon. Who is obscenely profiting from whom?

It is past time for the state of Hawaii and the City and County of Honolulu to understand the anxiety in our community regarding the high cost of living. We get a lot of lip service that our politicians care and want to provide relief in these difficult times. Here is your chance. Suspend the state, city and GET tax on gasoline. Yes, there will be a loss of revenue. But we are told we have to prioritize expenditures in our families. We are told we have to change our behavior. We have to be more efficient in all we do in order to get by. Our government should be expected to do as we do. Why? Because we are the government. The state and city budgets call for increased spending. The state went from a recent $700 million surplus to return only $1 of that to each taxpayer. The city is collecting an additional $160 million a year to fund a train of questionable desirability.

It is time for the government to put families first and stop this insane money grab now.

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