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Shield airlines from oil tax risk


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POSTED: Friday, July 17, 2009

Legislators overrode 38 of Gov. Linda Lingle's vetoes but cautiously backed away from challenging her blockage of a proposed tax increase on oil to support energy alternatives. The bill threatened to jeopardize interisland airlines, which need protection in any future legislation aimed at moving Hawaii toward renewable energy.

The bill would have increased the state tax on a barrel of oil by a dollar, raising it to $1.05. In her veto message, Lingle maintained that it would harm “;many struggling families and business owners”; by causing higher energy prices in sales made by distributors to retail dealers or end users.

It would have raised the price of gasoline by two to three cents a gallon at the pump, which is insignificant in comparison with price changes caused by the fluctuating price of oil. The price of a barrel of oil reached its peak of $147 last summer. While hovering around $60 now, it is bound to increase — some say enormously — as the American economy recovers.

Revenue from the tax increase, estimated at more than $30 million a year, would have been directed to various government programs and task forces to promote renewable energy and agriculture.

Some painful measures are needed to wean people away from petroleum products and increase the use of renewable energy, not only in automobiles but in homes and businesses. In doing so, planners should be careful to protect the most vulnerable.

In this case, that would have been Hawaii's airlines, which are trying to recover from a price war while coping with the current recession. The price increases, from which airlines flying between Hawaii and the mainland or foreign cities are exempt, threatened to be catastrophic to interisland carriers.

“;We can't afford to have another airline go down,”; said Senate President Colleen Hanabusa, alluding to last year's demise of Aloha Airlines.

Lingle has recognized the importance of shifting Hawaii from use of petroleum products to renewable energy. In her veto message, she pointed out that her administration had entered into an agreement with the U.S. Department of Energy to make such a shift and supported legislation drafted by the Hawaii Clean Energy Initiative to help achieve the goal of 70 percent clean energy by 2030.

The governor and lawmakers should seek agreement in the next regular session of the Legislature to enhance the movement toward renewable energy by taxing oil without putting interisland airlines at risk.