It’s time to repeal the GET

Repeal the GET

Hawaii is facing a budget shortfall. But this is not the time to raise taxes on already-burdened taxpayers.

What we need is true economic stimulus: to keep more of our earnings in our pockets, instead of our earnings being taxed and re-distributed to someone else.

To immediately stimulate the economy, we need to repeal the Hawaii General Excise Tax (GET) and replace it with a reasonable state sales tax on retail-level goods.

The GET taxes every level of production, from wholesale to retail. It’s a tax on almost every business activity. It’s excessive and unfair.

A reasonable state sales tax would…

  • stimulate consumer spending and business growth.
  • lower the cost of consumer goods, which would especially benefit low-income families.
  • remove the unfair pyramid taxation at every level of production.
  • eliminate the requirement to pay taxes on the taxes we pay.

Hawaii has the highest sales tax burden of all 50 states, according to the American Legislative Economic Council (“Rich States, Poor States” 2009); and collects the highest general sales tax per person ($1,997), according to the Tax Foundation (“State General Sales Tax Collections Per Capita, FY 2007” 2/5/09).

And did you know that Hawaii is the only state that imposes a general excise tax?

In Hawaii, for every $100 spent on retail goods and services, consumers pay $4.17 in general excise taxes — not including the Oahu rapid transit tax or wholesale taxes. That’s 17¢ more than if there were a 4% sales tax, plus a 1¢ tax on the $4.17 tax.

Sound like pennies? In FY 2008, retail businesses reported $59,497,017 in gross income. Hawaii collected 4% or $2,379,881 (Department of Taxation Annual Report 2007-2008, page 36) – not including the Oahu rapid transit tax or wholesale or other taxes. Consumers overpaid $91,534 in taxes – money that belongs to taxpayers and which could directly stimulate the economy.

Here’s my math: $59,497,017 tax base ÷ 1.04 = $57,208,670 tax base without taxes X .04 = $2,288,347 taxes owed. (If I have it wrong, let me know!)

You might be thinking: Hawaii needs the GET revenue!

I can’t argue with that. But think of it this way: no matter how much in taxes the government collects, they will always spend it. And more.

It’s not just about the pennies you could save during a regular transaction. It’s the principle of fair taxation. It’s about the freedom to decide how to spend our own money.

Is anyone else bothered by the GET? Do you really think it’s fair?

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