Editorials
Saturday, March 27, 1999

Say no to raising
general excise tax

The issue: A proposal to raise the general excise tax to 5.35 percent
Our view: No tax increases are acceptable in Hawaii's weak economy.

SOME people don't seem to learn. The Legislature spent much of its session last year wrangling over a proposed increase in the general excise tax, which was sponsored by Governor Cayetano. It failed.

But with this year's session due to end in six weeks, two senators are reviving the idea. Brian Taniguchi and Bob Nakata propose to raise the 4 percent tax to 5.35 percent -- the same rate increase that was defeated last year.

In an attempt to deflect criticism, they would earmark the increase for education. Taniguchi and Nakata also propose to eliminate the excise tax on store-bought food and reduce the pyramiding of the excise tax to 0.5 percent after seven years. The bottom line: The total package would result in additional revenue, variously estimated at $340 million to $150 million.

That won't fly. In Hawaii's stagnant economy, no tax increases should be considered. The way government can help the economy is to reduce taxes, not raise them. The proposals on food and pyramiding -- which would be welcome if not tied to a tax hike -- are camouflage.

There is an obvious way for the Legislature to find more money for education and other state programs. It should refuse to fund the public employee pay raises negotiated by Cayetano. The Legislature has a perfect right to do so. That would free hundreds of millions of dollars for use where they are badly needed.

In the state's tight fiscal situation, forcing legislators to cut programs severely, there is no justification for pay increases.

Miss Universe

The issue: The Legislature appropriated $3.3 million for the Miss Universe Pageant.
Our view: The money was well-spent.

WHEN the Legislature last year appropriated $3.3 million for the Miss Universe contest, there were cries that the money would have been better spent on education or social welfare programs. That criticism was based on a misunderstanding. The Miss Universe appropriation was intended as an investment in Hawaii's economy -- not a giveaway to a bunch of smooth-talking promoters.

The investment paid off. A report by the Hawaii Visitors and Convention Bureau says the event was worth more than $24 million in media exposure and visitor spending. The HVCB calls the pageant "an unqualified success on all levels." That ranged from "incalculable worldwide media exposure to local spending by the Miss Universe Organization's producers and pageant participants."

Based on a $152,000 price for a 30-second TV commercial, the bureau estimated that Hawaii got$4.7 million worth of media exposure in the United States -- and $7.5 million in other countries. There was also $3 million from the "Oprah Winfrey Show" and $3.8 million from "The Making of Miss Universe" on E!, $2 million in byproduct TV commercials and videos, $2.1 million in production spending in Hawaii and $1.3 million in visitor spending by pageant delegates and guests.

The HVCB surveyed residents of the United States who requested an Islands of Aloha travel guide after the pageant. The survey showed that 68 percent of those who requested the guide had seen the pageant.

The cost to stage the pageant was $5.07 million, but about $2 million was provided by various businesses. The HVCB returned $228,000 of the $3.3 million appropriated to the state.

That's a pretty handsome return on a $3 million investment -- a return that benefits all the residents of Hawaii. How many investments do as well?

Missile defense

The issue: Developing a missile defense system
Our view: Taiwan is justified in trying to build one as a shield against attack by China.

WHILE the United States proceeds with research on a missile-defense system, Taiwan is working on its own. The ministry of defense announced that it plans to spend about $9 billion in the next decade to develop a low-altitude defense against attacks from China.

There has been speculation that Taiwan might be included in the U.S. theater missile defense system -- if it is ever deployed. The suggestion has drawn the ire of Beijing, which warned Washington that it would be considered a hostile act.

But Taiwan isn't waiting for that to happen. It's doing its own research. Defense Minister Tang Fai said Taiwan would study the regional system but would move ahead with its own project in the meantime. In view of the threat of attack by China, it has little choice.

The announcement followed votes this month in both houses of Congress calling for deployment of a missile defense system, although neither measure would appropriate money or set a timetable. The Senate, on a vote of 97-3, declared it national policy to deploy a nationwide defense against a limited missile attack "as soon as technologically possible." The House voted 317-105 on a vaguely worded bill declaring it national policy to deploy an anti-missile system.

The Clinton administration switched tactics in the face of certain defeat and supported the legislation with the addition of two face-saving amendments. Earlier the White House for the first time included funds for deployment in the Pentagon's long-range budget plans.

The Pentagon figures it will take six years before it has a system that can shoot down incoming missiles, although skeptics question whether it will ever be achieved. Taiwan obviously agrees that it is doable.

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Rupert E. Phillips, CEO

John M. Flanagan, Editor & Publisher

David Shapiro, Managing Editor

Diane Yukihiro Chang, Senior Editor & Editorial Page Editor

Frank Bridgewater & Michael Rovner, Assistant Managing Editors

A.A. Smyser, Contributing Editor