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On Politics Richard Borreca |
Governor changes
tune on tax reliefIn nearly every election since statehood, Hawaii has had a Republican promising to rid these islands of the scourge of taxes on food and medical services .
"We need food, we must go to doctors and hospitals, so how can the state tax us for these necessities of life?" GOP candidates would ask repeatedly.
In her two campaigns for governor, Hawaii's top Republican, Linda Lingle, made the pledge a key part of her platform.
"It is bad public policy to tax people who are sick or injured. This tax puts the heaviest burden on our senior citizens and others on fixed incomes," candidate Lingle said in her campaign last year.
Since her success in November, however, Governor Lingle has been edging away from this campaign promise.
In January, Lingle told Hawaii Business magazine she was adjusting her thoughts about tax reform.
"Whether it's a food tax or we do it as an earned income tax credit, there has to be relief for the people who are just earning minimum wage," Lingle said.
Then, in her first State of the State address, Lingle took the food and medical tax issue off the table.
"When the economy improves, I will ask you to repeal the tax on food and medical services.
"But, given the fiscal reality we face, the only tax relief I am asking for in this budget is to reduce the income taxes of those who earn the least," Lingle said.
Finally last month, Lingle told a group of reporters and editors that "I have changed my approach."
She shifted from saying that a tax on food and medicine was unfair to saying she wanted to reduce the regressive nature of Hawaii's excise tax.
"My more immediate proposal will be to increase the standard deduction, but that is because it goes to the heart of what I was trying to achieve, which is to lessen the tax burden for the lowest wage earners, whereas the elimination of the tax on food and medical care applies to those whether you are making a half-million dollars a year or $25,000 a year," Lingle said.
Lingle's legislative lieutenants, Sens. Fred Hemmings and Sam Slom, picked up their leader's audible and rearranged their tax philosophy to include the standard deduction, but also continued the call for food and medical tax cuts.
"The governor says she has changed her position, but I don't think it changes anything," said Slom, who vowed to press for both tax changes.
Lowell Kalapa, Tax Foundation executive director, reacted to the policy shift by saying, "Finally someone got to her and talked some sense." He contends that the 4 percent excise tax is not a major food or medical cost for consumers, but the low standard deduction is a cruel tax on the poor.
Hawaii starts charging income tax after you earn $2,000, while other states, California for instance, ignore your income until you make $16,000, Kalapa said.
The tax on food and drugs is one that everyone pays, so it will continue to be a popular tax to be against. But Lingle is moving herself closer to a moderate Democratic idea of tax reform for the poor while forcing the Democrats to come along.
See the Columnists section for some past articles.
Richard Borreca writes on politics every Sunday in the Star-Bulletin.
He can be reached at 525-8630 or by e-mail at rborreca@starbulletin.com.