Taxing container fees hurts isle consumers

THE ISSUE Businesses may impose the state excise tax on beverage deposits and container fees.

IN the beginning, the beverage containers fees weren't subject to the state excise tax. However, as happens in the evolution of taxes, businesses now have the option of adding the tariff on the fees, as long as they pass on the money to the state, the Star-Bulletin's June Watanabe reported in Kokua Line this week.

The 5-cent refundable fee was not meant to raise revenue for the state. Together with a 1-cent handling fee for administrative costs, the intent was to encourage recycling and discourage littering.

Nonetheless, consumers are paying the unintended consequence of legislative default. Though the state's treasury isn't gaining a hefty increase, customers are laying out more for each can of soda or beer they buy.

When the "bottle bill" was passed in 2002, it did not clearly exempt the 1-cent handling fee from the excise tax, but to ease compliance with the new law the Tax Department initially exempted both fees. Because the Legislature did not clarify the matter in subsequent years, the department took that to mean it intended the tax to be imposed.

The department thus allowed businesses to decide whether to add the tax and because it's less of a humbug for accounting, businesses are more likely to charge the tax.

Lawmakers have allowed excise tax exemptions in other transactions, such as for materials for science and research, but because they, too, are optional, the intent of easing the cost of those desirable endeavors often fails.

Consumers' only course is to buy beverages at stores that don't tax fees and lobby lawmakers to fix the law.