By Dale Evans, President, Charley's Taxi & Limousine

What business can survive without passing on costs (taxes and user fees) to customers? Using the interpretation of the Corp Counsel (opinion letter enclosed), we cannot even charge our customer the GE tax pyramid the state collects from the taxi company when billing a corporate account, separately and independently of the cabbie's fare. This very elementary concept of passing on our costs doesn't seem to fit the taxi laws and regulations on state and county levels.

This matter is of immediate concern because the State DLNR proposes to charge taxi drivers $10 every time to pick up or drop off passengers at Diamond Head. The taxi drivers being the smallest of small businesses, and visitors being a precious commodity in these times of low occupancy, this tax is one more manifestation of a careless, anti-business atmosphere created by government.

The fee is discriminatory on a per passenger basis. Where a bus carrying 40 passengers will be charged $40 (average $1 a head), a taxi carrying 2 passengers will be charged $5 a head.

PUC allows buses, vans and limousines to pass on costs to the passengers, whereas taxies can't. By law, cab drivers and taxi companies are not permitted to pass on the cost of user fees to customers. The fee is unfair because the cabdriver is not the actual 'user.' The cabdriver will simply be driving to his customer's destination. The fare from Waikiki to Diamond Head or visa versa is about $7. When the $10 user fee is offset against the fare for providing the trip, the driver winds up paying more in taxes than the total amount of his fare.

To compound the problem, the taxi ordinance also prohibits trip refusal. The cab driver's resentment to pay the $10 cost is likely to be expressed through body language or suggesting the customer take a hike. The customer is bound to be offended, especially if the customer is foreign speaking and doesn't understand the situation fully.

This user fee will therefore cause severe financial loss and unnecessary problems to the taxi drivers and taxi companies. Ultimately, as visitors encounter such bad experiences, Tourism will be damaged. The city used to have a $4 fee for entry to Hanauma Bay, but because of the substantial financial loss to the taxi drivers in not being able to pass on the user fee to customers, the City Council finally repealed the fee. So should the state not start charging a fee on taxis. These confounding taxes on tourists and taxi drivers are unfair, untimely and unwise.

This is just one more example of the interference and over-regulation of business ‹ an interminable nightmare that seems impossible to change.

Tyranny Hides in the Payroll

By Richard O. Rowland, Rowland & Associates

It's tax time again. Big effort once a year. Pain in the !@#$*?!. Grumble, grumble about government and all it takes from us and our employees and how little is received in return. The State legislature is also in session. So it's a good time to review what your government takes from its subjects. Your employee can look at her pay stub and W-2 form and see what is itemized there as government tribute. She probably thinks bad as it is, at least that's all she pays. Not so. Government issues require a careful look at the unseen as well as the seen.

What she doesn't see are the hidden levies that the employer must pay on her behalf. Worse yet, if the employer was not required to pay those costs - the employee could have that amount added to her take home pay. What's that amount? Well it's more than is taken on the payroll stub. And taxpayers in Hawaii get hit harder than those in every other state and the District of Columbia. Worker's compensation premiums, unemployment insurance taxes, TDI, medical insurance premiums and the employer share of the FICA payroll tax are real costs that the employer pays by government mandate.

For example, say your employee earns a gross income of $27,200 per year. Add in worker's compensation premiums, unemployment insurance taxes, and the employer's share of FICA payroll tax and you get an employer cost of about $32,300, the highest in the nation. Now add in TDI and medical insurance (in Hawaii required by law) and you have $33,920 that could have been allocated to gross pay of the employee. Think that's bad? Let's look at the employee's bottom line, the take home pay: about $21,500.

Wow! The pay is $27,200 per year. That's $2266 per month. When you say to a prospective employee, "The pay is $2266 per month," your experience tells you that it will cost you $2827 per month to do that. Ouch! That employee must give you big profits to justify that cost. But the experienced potential employee, hearing $2266 per month knows that when the paycheck comes it will actually be $1791 per month.

Let's summarize this incredible story:

You carefully calculate that you can afford an employee at a cost of $2827 per month so that they will produce at least $3227 per month in gross profit for your business. The employee ends up getting $1791 per month. Your reality is $3227, the employee's is $1791. The employee knows she is productive to the tune of about $3227 and gets only $1791. Can you blame her if she believes she is being ripped off big time? She would have to be awfully dumb (and not worth $3227) if she didn't feel that way. Problem is, many good employees think that the employer is the criminal instead of the real culprit - the federal and state governments. And the reason she does not know is that the legislators and administrators, who are responsible for this travesty, do not want the employee to know that her take home pay could be $2827 per month instead of $1791; if only the government was not involved in the peaceful, mutual exchange that the employer-employee contract should be. Right now, thanks to the government, you are victimized, your employees are victimized and your employees blame you for their plight.

Now for the good news. You can strike back by using the "Right to Know Payroll Form."

The power to tax is the power to destroy. Knowledge is power. Ideas have consequences. To empower your employees with knowledge has as its ultimate consequence the destruction of tyranny via payroll tax.

"Thanks to Dean Stansel, fiscal policy analyst at the Cato Institute, Washington, DC for much of the data cited above and the Mackinac Center for Public Policy, Midland, MI (www.mackinac.org) for the original Right to Know Payroll Form on which ours is based. And, most especially, thanks to Lowell Kalapa of the Tax Foundation of Hawaii.

Hiring Repair People - The Right Way

By Clarice Johnson, Johnson Property Management, Inc.

If a repair person you hire to work at your house is injured, can he or she sue you? Unfortunately, the answer is yes.

Hundreds of home repair people in Hawaii are not licensed and more importantly not insured. We are not referring to health insurance but business liability insurance and workman's compensation insurance for their helpers. Many home owners are not aware that they should make sure repair people are licensed and insured or they could be held responsible for the injuries of the person hired and any helper that assists with the work.

Repair people often work with power equipment, ladders, chemicals, electricity and many other items that can cause sickness, injury and even death. If an accident happens and the people doing the work are not properly insured, the homeowner, real estate agent, real estate brokerage company or anyone who hired the repair people, could be found liable and forced to pay for medical treatment, lost income and more.

Here are some tips for hiring home repair people:

1. A job costing $1,000 or more (including material, labor and tax) must be handled by a licensed contractor. Jobs cannot be broken into smaller pieces to circumvent this law.

2. All plumbing and electrical work must be completed by a licensed plumber or electrician, regardless of the cost or size of the job.

3. Ask for proof of business liability insurance regardless of the size of the job. The amount of insurance should be of an adequate amount to cover any possible liability. Request a certificate of insurance from the insurance company.

4. If anyone, other than the owner of the repair company, is going to be working on your property, be sure they are covered by workman's compensation insurance in addition to the business liability coverage.

5. If the repair person or company refuses to supply you with the proper insurance documentation, find someone else.

6. As a safeguard, call the Department of Commerce and Consumer Affairs, Professional And Vocational Licensing Division, Contractors at 586-2700. They can tell you if the person is properly licensed and if there are any unresolved complaints against the person or company.

Construction and repair work is dangerous and thousands are injured each year. A little prevention on your part can minimize your risk and liability if you are the one hiring or the owner of the property being worked on.

For complete information concerning contracting in Hawaii refer to Hawaii Revised Statutes, Chapters 436B and 444 or contact a reputable attorney for advise and assistance.

PRICE DISCRIMATION

By Tracy Ryan, Libertarian Party of Hawaii

People don't like the word discrimination. It has a lot of bad connotations, But everyone discriminates. Whenever you shop you make discriminations between various products based on your tastes, needs, and means. value is subjective. What you will pay for an antique vase, for example, may be much less than what I would.

To sellers information about a customer's tastes, needs, and means is a benefit. Sellers can charge more or less based this information about variances in demand. Sellers of automobiles, of real estate, or of professional services, may often practice this form of price discrimination. Those who can and will pay more ultimately do pay more for the same product. For this they get first choice of the things that are most important to them. However, additional less profitable sales, to individuals with less demand, are still worth pursuing. These people buy items at mark down, or with other special promotions attached.

Some markets lend themselves easily to price discrimination. The greater the knowledge of the customer and the more variance there is in demand between potential customers the more sense it makes for business to charge varying prices to maximize sales and profits. It is the customer who ultimately benefit as each gets what they want for what they're willing to pay.

Some businesses, such as sellers of gasoline, or groceries, don't lend themselves to price discrimination because there is less variance in demand and less opportunity to know individual customers.

This year the legislature is considering a bill that would outlaw price discrimination based on the gender of the consumer. Price discrimination based on gender flourishes where there is an identifiable variance in demand based on gender. For example a bar or a ball park may offer "ladies night" or other discounts to encourage women to patronize their facilities. On the other hand women are likely to be charged more for a haircut or alterations on their clothing purchases. These are market phenomenon that benefit consumers. Unfortunately understanding of market economics is in very short supply at our legislature. Attaching emotionally charged words like "discrimination" to a bill makes it very easy for their judgement to founder.

The essential error in bills such as the above is in seeing business as having an arbitrary power to set prices. They ignore the essential role of consumers in price setting. one can choose to believe, as the drafters of this legislation apparently do, that the reason a woman spends more money on her wardrobe than her husband does on his is because retail merchants are chauvinistic exploiters. Or one can choose to believe she spends more on her clothes than he on his because she places a higher value on her wardrobe.

Passage of anti price discrimination bills will have a terrible effect on business. If they choose between servicing the high paying portion of their market fully they will lose the low paying group altogether. Or they can risk facing crippling litigation. In the long run consumers will suffer just as they always do when the government meddles in the market place.

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