There's no need to fear the tax man. At least not when he's Lowell L. Kalapa, the president and executive director of the Tax Foundation of Hawaii, a nonprofit, nonpartisan research group specializing in explaining the intricacies of public finance, taxation and administration.

“;We don't have an ax to grind. We don't have an agenda other than to say, 'Pass taxes that are fair to all of us,'”; said Kalapa, explaining his approach at the state Legislature, where he testifies on a broad spectrum of finance-related measures.

Born in Honolulu, Kalapa graduated from Punahou School and Northwestern University, where he earned a bachelor's degree in economics and political science and a master's degree in journalism.

He returned to Oahu after college, working as a legislative researcher before joining the Tax Foundation in 1973 and rising to the top post in 1979.

He and two staffers analyze hundreds of bills annually, and he's struck more than ever by the apparent lack of understanding of basic economic principles among the public and even some lawmakers as the state deals with a $1.2 billion shortfall in the 2009-2011 biennial budget.

Kalapa contends that cutting spending, rather than raising taxes, is the smartest way to cope, given that the overall economy remains weak.

He considers himself “;a fiscal conservative with a big heart”; and assists a variety of community groups, especially those serving needy families.

Kalapa, 60, spends his free time cooking, traveling and reading — “;and not just journals of taxation.”;

QUESTION: How many tax-related bills are you following at the Legislature?

ANSWER: Between 300 and 400 bills. It's not just taxes. We're also following things like fees, credits, special funds. For example, Monday's (Senate) Ways and Means (Committee) hearing talked about a review of the special funds to be done by the legislative auditor. We feel that's very important because so much of the state budget now is funded out of special funds.

Q: Which are you following most closely?

A: We're at a point at the Legislature where everything is up for grabs. It's a winnowing process. By crossover we may be down to four or five dozen bills.

Q: Let's talk about some bills that have been heavily promoted: proposals to raise the general excise tax and the (high-end) income tax. Are you sensing much legislative support?

A: It seems like there's some reticence about increasing taxes, although I think when push comes to shove they may just move the (excise tax) bill along, as they say, in the legislative sphere, to keep it alive. That bill, in fact, could go all the way to the end of the session before a final “;doomsday”; vote is taken.

Q: Do you support raising the GET?

A: No. Because that's a lot more insidious than it appears to be. ... The general excise tax is a very broad-based tax. When you raise the rate, even by a penny, it has a dramatic effect on the cost of living in Hawaii.

Q: What about the income tax bill?

A: I think it's gotten buried. I think there are two things: One is the fact that ... although we like to think that we can tax rich people ... they're the ones that create jobs because they're the ones who have the capital to create those jobs. The second thing is the fact that, based on last year's actions, where they did increase income tax rates for higher-income individuals ... income tax collections are still down. It's kind of the same discussion that's taking place around the general excise tax increase. Both general excise and individual income taxes are below levels collected during the same period of 2009.

Q: What about the teachers union's argument that Hawaii's income tax is regressive?

A: We do start taxing the poor at a much lower threshold than other states. But the amount of income taxes paid is largely paid by those in the higher (brackets). I think 51 percent of the income taxes paid, the actual dollars collected, come from the top 10 percent of income individuals. ... You've got only so many returns in the six-figure-and-above income. How much more are you going to tax them, when they're already paying over half the collections?

Q: What other tax-hike proposals are significant?

A: I think the one that's getting a lot of emotional support is the barrel tax. That's the one that is supposed to fund the clean energy initiative — energy independence by 2030. That's the one that goes from a nickel per barrel right now to $1.05 per barrel. The problem we have with it is that tax originally was intended to create a reserve fund to do shoreline cleanup of oil spills. That was enacted within five years after the Exxon Valdez (oil spill in Alaska). ... And over the years it's morphed into a number of other types of responsibilities. ... So now it's being looked at to fund sustainability of our energy use. And I think that that is a really underhanded way of funding that.

Q: Why?

A: All of us consume energy ... but this tax is imposed at the point that the barrel of petroleum product comes on land in Hawaii. It's not being upfront. We're not saying “;Mr. and Mrs. Hawaii: Are you willing to pay a dollar more in the cost of your gallon of gas?”; It's not at the pump. By the time it gets to me, the final consumer, it's embedded in the cost of the shelf price of the product I'm buying. But I won't blame state government, I'll blame Tesoro because my gasoline is now $4 a gallon. That's not accountability. I want to know what I'm paying for and how much I'm paying. The other thing about that bill is that it creates another huge state bureaucracy. And it provides automatic funding for the various county economic development boards, all of which are nonprofits. So they're funding agencies that are not even agencies of government. I just wonder how many, for example, health and social service agencies would love to be beneficiaries of automatic funding like that, with no accountability.

Q: But it seems to be gaining legislative support?

A: It's nice to be green. I think we really have been misguided by thinking that we can buy our way out of environmental disaster when we really need to change our daily practices.

Q: Do you ever support tax increases?

A: Yes. (He goes on to explain the Tax Foundation's past support for periodic increases in the gasoline tax to fund road maintenance and its support for the continuation of a half-percent tax on wholesale sales.) Those are just a couple of examples. It's not that we're anti-tax. We just think that if you are going to raise taxes that there should be accountability and equity. That's why we don't agree with the tax credits for business activities that have absolutely no relationship to whether or not relief is needed. The tax system has come to be leaned upon as some kind of socioeconomic manipulator, if you will, that we can somehow change the direction of our society or our economy by handing out incentives or imposing punishments on people so that they'll change their behavior. And the tax system is not there for that. The tax system is there to raise money for government operations. Period.

Q: Anything else important, tax-wise, going on in the Legislature?

A: I think I, and a number of legislators, especially in the areas of the money committees, are just frustrated, if not flabbergasted, how out of touch many of the other legislators, and people in the public, too, are about the financial situation of the state. There's a real lack of understanding of basic economics, I think, in this time of financial crisis when (that knowledge) is crucial. The guys who are up there hustling tax credits. Don't they realize the state is facing a billon-dollar shortfall? Or is there a disconnect that they don't understand that tax credits are really a charge against the general fund? We're sitting there in wonderment going, “;We're trying to find ways to cover that shortfall, be it raising taxes or cutting spending, and here comes somebody who says 'I want a tax incentive, I want a tax break.' But that's coming out of the same pot.”;