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Forbes slams isle taxes,
says regulation is excessiveDelegates discuss corporate responsibility
By Susan Kreifels
Isles told to get hep to high-tech
Star-BulletinFor local officials who hoped to improve Hawaii's poor business image, there couldn't have been a worse speaker to end this week's prestigious gathering of corporate power.
"Hawaii is one of the most overtaxed" and overregulated states in the country, said publishing magnate Steve Forbes, sparing little mercy for the state.
In 1997 Forbes magazine ran a story titled "The People's Republic of Hawaii," which blasted the state's bureaucracy and what the article described as an anti-business mentality.
Forbes, who has twice run unsuccessfully for the Republican presidential nomination, said yesterday that Hawaii was making some progress, but "you've got a ways to go."
"Given Hawaii's location, climate, and technology ... there's no reason this place should not be booming," Forbes said at the Pacific Basin Economic Council.
An unsmiling Gov. Ben Cayetano sat in the front row during Forbes' speech.
"Gov. Cayetano said that if Steve Forbes took a good look around, he would be pleasantly surprised to know we have done quite a bit since that article appeared," said Cayetano's spokeswoman, Kathleen Racuya-Markrich. She said Hawaii had one of the biggest personal-income tax breaks in the nation, a lower unemployment rate than the national average, and rising tax revenues.
And Larry Johnson, PBEC conference chairman and chief executive officer and chairman of Pacific Century Financial Corp./Bank of Hawaii, said he told Forbes that business was already benefitting from improvements in the tax environment and workers' compensation.
But Forbes said at the conference that any reforms were "baby steps. You need to go whole hog and this place will do extremely well."
Forbes said major cuts in capital gains taxes in 1978 led to "the rise of Silicon Valley and high-tech," and a moratorium on Internet taxes in 1998 was when the "dot-com businesses exploded."
"These good things are not inevitable unless you create an environment that can flourish," Forbes said. "The key is to take real action and worry less about image. Then you'll have something to sell and the image will change."
Richard Lee, an attorney who advises businesses, agreed that Hawaii's taxes must be changed. The 4.16 percent general excise tax "is the type of tax driving business out of Hawaii," Lee said. "They have to figure out something else, otherwise business will never come here, especially in a global economy."
Forbes also suggested that Hawaii "chip away" at the federal Jones Act, which allows only U.S. ships and crews to carry passengers and cargo between U.S. ports. Forbes said cruise ships in Alaska were exempted from the act, which he said had "long outlived its usefulness."
