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Hawaii State of the State Address Seeks Wasteful Credits and Soda Tax

2 min readBy: Scott Drenkard

Hawaii Governor Abercrombie addressed the Hawaii legislature yesterday to offer his plans for the new year. Among his proposals was an effort to make Hawaii’s Film Tax CreditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. program permanent as well as a plan to spend $1 million on a task force that will examine “solutions” to the obesity problem of Hawaii.

As we have noted on many occasions, film taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. incentives do little to spur job growth, and the jobs they do are create are fleeting. Of course with any tax credit lawmakers must take into account the fact that revenue allocated to credits is money that cannot be spent elsewhere in the budget.

I’m personally convinced that many lawmakers and voters approve these generous benefits just because they think movies are sexy—they like to see their home state on the big screen. Abercrombie’s speech gives credence to this notion: “the film industry also depends on showcasing the beauty and variety of our aloha state. We’ve seen what these islands can look like on big screen and television.” The glamour of the movies shouldn’t inform tax credit decisions.

As for soda taxes, I see Hawaii as a battleground state for a sugar-sweetened beverage tax in the coming years. In 2011, four bills were introduced in the Hawaii the legislature that proposed a 1 cent/ounce tax on sugary drinks with Orwellian names like the “Sugary Beverage Healthy Hawaii Fee” (by the way, it isn’t a fee, it’s a tax).

Abercrombie makes a misstep on his description of the science behind soda taxes though, saying, “the link between sugar-sweetened beverages and health is undeniable.” As I noted in the Washington Post last weekend, the science is unclear about the link between soda consumption and obesity. Further, an excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. on soda (which is almost certainly what the million-dollar task force will recommend) necessarily falls on all consumers of soda, even those that use soda in a moderate, appropriate manner.

The theme of Abercrombie’s speech was “Pupukahi I Holomua,” or, “Unite to Move Forward.” If Hawaii wants to move forward, it needs to leave these backwards tax policies behind.

More on Hawaii here.

More on sugar and snack taxes here.

Follow Scott Drenkard on Twitter @ScottDrenkard.