Business Climate


Forging Ahead: Hawaii’s Restrictive Business Climate and Way Ahead

Hawaii is perfection in many regards. Yet when one peels back the layers of our paradise, glaring issues and inequities are apparent throughout the state. The high cost of living, the increasing homeless population, and environmental sustainability issues affect nearly everyone in the state and are continually leading topics of discussion in the media and in various state political arenas.  However one topic of conversation rarely seems to grab the headlines in Hawaii, and when it does it is only given a secondary or tertiary glance. More alarming is the manner in which the state’s political leaders and elected officials in the state government address the issue. The topic is the current business climate in the state of Hawaii, specifically the restrictive environment within which small and medium locally-based businesses are forced to operate in. Hawaii’s elected leaders are more than willing to discuss the aforementioned issues, yet, there seems to be disconnect in lawmakers understanding of how a healthy business environment can affect positive change in regards to homelessness and environmental issues.

Hawaii is consistently rated as one of the worst states in the country for its hostile business and tax climate; specifically over the last five years. There are several factors contributing to this reality; namely the state’s geographic location and governmental policies and regulations regarding business and taxation. Currently, Hawaii has the highest state income tax. Economists and business leaders alike agree that states with high income taxes lose economic development and diversity, population and jobs to states with lower income taxes. In short, income taxes impact entrepreneurship and business as a whole. It should be noted that although this year saw the expiration of temporary tax increases in Hawaii, the state still holds an unusually high number of nine income tax brackets which serves to not only complicate matters for local small and medium sized business owners but creates issues with transparency within the government as well.

Given the aforementioned reality, what can be done to change the operational climate in regards to business? The answer lies within community based organizations and individuals with an intimate understanding of how taxation and burdensome government thwart a healthy, sustainable way of life for us all and our environment. Politicians and entities must be held accountable for their policies and subsequent consequences. Organizations like the Grassroot Institute of Hawaii and Smart Business Hawaii have started the conversation by organizing meetings with expert panel members in the area of taxation and business in an effort to not only acknowledge the current issue but develop solutions focused on a thriving and diverse Hawaiian economy that involves all members of the community. Our government is, in essence, a reflection of our choices and our communities. The choices made at every level of our local and state government deeply impact each of our lives and our ability to raise our families in a safe, healthy, and thriving environment. Accountability, transparency and an understanding of the issues affecting their respective constituents is a vital piece to solving the business crisis in Hawaii. Therefore community based organizations have the ability to empower each citizen and ensure our elected officials understand our needs and are accountable for all of their choices.