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By Lloyd McGraw on Apr 13, 2010 with 1 response

Hawaiian Legislature to Propose $1 Per Barrel Tax Hike

Last year, Hawaiians came out to protest tax hikes on oil.

Hawaii’s State Legislature is attempting to address their budget woes by proposing a tax increase on petroleum from 5 cents a barrel to $1.05.  Gov. Linda Lingle is expected to veto the bill.

“The question that’s being asked is how to raise revenue. And there’s a general reluctance on the part of the Senate to raise the general-excise tax,” said lead Senate negotiator Clayton Hee, D-23rd (Kāne’ohe, Kahuku). “To balance the budget, the Senate budget committee looked at special funds. The barrel tax is one of the special funds.”

The legislature’s objective in focusing on special funds is to avoid a general excise tax increase which they feel would have broader ramifications on their constituents.

The Senate initially wanted to see the barrel tax raised to $1.55, however, they abandoned that 3000% increase hoping that the relatively smaller tax hike would garner sufficient votes from the House to pass.

Dissent in the legislative body is based, in part, on the sentiment that too much of the proposed tax hike would be earmarked toward addressing budget concerns rather than environmental issues.  Under the bill, which the Senate hopes to present by tomorrow, only 40 percent of the money generated by the barrel tax would go to environmental initiatives.

The increase “becomes nothing but a tax on the motoring public and on everyone that turns on their lights,” according to State Rep. Cynthia Thielen, R-50th (Kailua, Kāne’ohe), an environmental attorney and strong advocates for alternative energy.

Not all environmentalists are taking Thielen’s all-or-nothing approach.  “Forty percent of manapua is better than no manapua at all,” said Robert Harris, director of the Sierra Club’s Hawaii chapter.  He also told The Honolulu Advertiser that the new draft is a shell of what environmentalists wanted when the bill first moved last year.

A year ago, Lingle successfully vetoed a bill for an increased barrel tax and she is expected to oppose this proposal as well.  She is concerned that the tax hike would be passed onto consumers in the midst of a tough economic environment.

If the bill passes, with or without Lingle’s support, it is expected to provide $22 million in revenue to the state.

  1. By CEA on April 14, 2010 at 3:01 pm

    I think what people don’t realize is that an energy tax is not something completely unheard of. For years, Europe and Japan have taxed the price of fossil fuels to promote efficiency and renewables (with good results). This also plays a balance of power with oil producing countries such as OPEC. Although an oil tax may help in generating income, policy makers need to be extremely careful not to so much strain on gas prices that other parts of their economy shrink because of this.
    Want to learn more about balanced energy for America? Visit http://www.consumerenergyalliance.org to get involved, discover CEA’s mission and sign up for our informative newsletter.

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