Hawaii ranks last
in U.S. for business
friendlinessThe state's high sales and gas
taxes, along with electricity
costs, put it at the bottom,
a survey finds
Hawaii once again is ranked last among the 50 states when it comes to being friendly to small businesses, primarily because of its high taxes, according to a Washington-based advocacy group.
As it did in 2002, the Small Business Survival Committee put Hawaii at the bottom in its eighth annual ranking of the states for policies that impact small businesses and entrepreneurship.
The group's "Small Business Survival Index 2003" released yesterday shows Hawaii with the highest sales tax, highest electricity costs and highest gasoline tax. It lists Hawaii as having the fourth highest crime rate, fifth highest workers compensation and unemployment insurance costs, sixth highest personal income tax rate and tenth highest capital gains tax.
In a more favorable area, Hawaii is ranked 32nd for its corporate income tax rate, 43rd for property taxes, 36th highest in health care costs and 30th highest in number of bureaucrats per 100 residents with 5.67.
"The index ties together 21 different measures and what we're looking at especially: Is government policy a plus or a minus on the local business environment," said Raymond Keating, SBSC's chief economist and author of the study.
"There are some glaring negatives for Hawaii, which hurt its business environment," he said. "There have been some positives and some improvements, but overall, the negatives far outweigh the positives.
"It has very high personal income and capital gains taxes. It's a rate that's very burdensome for businesses. There's also a high gross sales tax, high unemployment taxes, high electricity costs, high gas taxes and high workers compensation," he said. "Hawaii also has a very high crime rate as well."
Gov. Linda Lingle said she had not seen the report and would have to look at the group's criteria before commenting.
However, she said she feels that more important than tax rates would be the amount of job creation there is in the state and small business' confidence in government "and whether people have trust that government's going to treat them fairly.
"It's a difficult thing to measure, but it's an important motivation when someone decides: Am I going to risk money in this state?" she said.
Getting highest marks in the 2003 index were South Dakota, Nevada, Wyoming and New Hampshire. With Hawaii near the bottom were Rhode Island, Maine and Minnesota. Washington, D.C., was also included in the survey and ranked even lower than Hawaii.
In 2001, Hawaii ranked as the second-worst state, just ahead of Rhode Island. The District of Columbia was at the bottom.
After Hawaii's previous poor showings, then-Gov. Ben Cayetano said the Small Business Survival Committee is a very conservative group that views unionism and a lack of a right-to-work law as negative for business.
