Chair Ige, Vice Chair Green, members of the Committee on Health,
The League of Women Voters of Hawaii opposes SB 185 which would assess a surcharge on all soft drinks sold in the state.
We agree completely with the explanation in Section 1 which talks about the problem of obesity and also the illnesses that are caused by the consumption of too much sugar. Our quarrel is not with the importance of educating the public on the negative impacts of soft drinks nor our taking active steps to discourage the excessive consumption of sodas. Our concern is with the use of our taxation system
to achieve that end.
Our taxation system is based on the honor system mostly with the majority of citizens honestly declaring all taxable income. We do so because we know that taxes are necessary for governments at all levels to operate and take care of the needs that we, as individuals, cannot do for ourselves. We developed the public school system because we knew that democracy could not thrive without an educated citizenry.
But more and more, we are using taxes to enforce certain behaviors besides welcoming the revenues the taxes bring in. Congress and state legislatures give tax exemptions and preferences because they feel that will help the economy and the benefits will trickle down, among other less honorable reasons for doing so. We have looked for added revenues from the so-called “sin” taxes on tobacco and alcohol. And now, soda pop will join the other sins. How about adding chocolate candy and fast food hamburgers.
All of these exemptions and add ons have created a federal tax system so complex that the system has created a constituency that is dependent on that complexity--- the certified public accountants. We have a tax system, federal and state, that has become more and more regressive. At the federal level, what was once a very progressive income tax has become less and less so, with rates at the top level being lowered and all kinds of deductions being added. The very regressive FICA tax has had its surplus tossed into the general fund and used to give tax cuts or used for government operations. Since there is no prospect for these “loans” ever being repaid, the workers at the lower end of the pay scale for whom 100% of their wages are subject to the FICA tax, workers who already pay their fair share of the income tax are now, in effect, paying a surtax on their incomes. In other words, equity and fairness have been taken out of our tax system. Meanwhile, we have special lower rates for investment income and higher rates for “earned” income. Income should be plain income for tax purposes.
Our tax system should be used mainly to collect taxes to run our government and to fund those programs that are necessary for the well-being of our community. What we should not be doing is to
complicate the system by adding special taxes for behavior change, and values change, mostly hitting the population that is least able to afford the taxes.
When people are able to understand the tax system, and regard it as fair and equitable, doing what it is supposed to do in the most efficient manner, they are more willing to respect it and pay their fair share. When they regard it as unfair, many lose respect for the system, and will try to look for ways to pay less than their share.
We ask you to hold this bill in committee.
Thank you for this opportunity to testify on SB 185.