Tax, spend, regulate, repeat. Will Hawaii lawmakers ever learn?
by Keli'i Akina, Ph.D., President / CEO, Grassroot Institute of Hawaii
It has been said that the definition of insanity is doing the same thing over and over again and expecting different results. If that’s true, then it helps explain why Hawaii business leaders are so pessimistic about the state’s economy.
The latest semiannual BOSS Survey of local business owners and executives conducted by Hawaii Business magazine found that more than half of the respondents, 57%, said Hawaii is a worse state to do business than it was five years ago.
In addition, 45% reported believing that the local economy will get worse in the coming year, and 31% said they anticipate needing to cut costs substantially to survive.
Of course, none of this is a surprise. Hawaii is consistently rated one of the worst states in which to do business. In fact, as I remarked in one of my columns in July, the national news outlet CNBC recently ranked Hawaii dead last — for the first time — in terms of its business climate.
The reason for this is that Hawaii lawmakers continue to make life hard for those who supply the many goods and services we need to live and prosper, namely through high taxes, excessive regulations and too many burdensome permitting and licensing requirements.
Yet evidence from multiple sources is overwhelming that the U.S. states with the greatest economic freedom flourish the most.
In Hawaii, business leaders have watched for years as state and county policymakers talk about lowering the cost of living or encouraging economic growth. But what has really happened? For the most part, they simply repeat the old, familiar cycle of “spend more, tax more and regulate more” that brought us to this point in the first place.
Even when substantial reform happened in 2024 with the passing of the biggest income tax cuts Hawaii residents have ever seen, some state officials immediately moved to claw them back.
Under the circumstances, it is a wonder that the state’s business leaders didn’t express even more pessimism about the future.
Looking ahead, the Economic Research Organization at the University of Hawai‘i is forecasting further bad financial news for the coming year, including a decline in tourism, a weak job market and just 0.5% growth in the state’s gross domestic product or GDP, compared to more than 3% last year.
How will Hawaii’s lawmakers respond to this additional economic strain? I hope not with the same old same old, such as claiming that a weak economy justifies more spending, which would likely lead to even more taxation.
Instead, it’s time to finally stop the insanity and try something different — starting with meaningful budget cuts that give Hawaii's taxpayers and businesses some much-needed breathing room.
E hana kākou! (Let’s work together!)
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