The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1908-07-08
(Continued)
REPORT ON THE EN-
TERPRISE FOR PROFIT TAX.
(Continued.)


whom was assigned the subject of
certain special methods of assess
nent under the general property tax
submits the following criticisms and
based on his experiences
as taxpayer with the practical work
ings of the so-called Enterprise for
Profit Tax" supplemented by desuE
tory study as a Commissioner, of it's
economic significance in our taxation
system.
The shortness of time granted tol
the Commission in which to file its
report considered with respect to the
date of it's permanent organization,
has precluded that detailed analysis
of the actual and comparative results
of its operation which can only be-
based on extensive data which the
tax office, in the stress of other bust
ness, has not been able to furnish
on the short notice necessarily given.
What follows is, therefore, general in
character, but the member believes
that a patient and comprehensive
study of all the property and income
assessments of the Territory with ref
erence to the nature of the properties
and incomes assessed would bear out
the contention for the abandonment
in Hawaii of the unit method of as
sessment of business enterprises.
The importance of the subject is
apparent for the law in effect provid-
es that every business undertaking,
whether a plantation, a ranch, a fac
tory, & store, hotel, a boarding
house, a play house, a railroad, a ca
BILE concern, a cannery, photograph
gallery, and, if incorporated with 9th
err pursuits in connection with WISH
BILE property, even an agency, shall be
assessed as enterprises for profit.
That it has not been applied dur
ing twelve years past to all the above
and other classes of business enter
prises is, apparently, not because Of
any indefiniteness in the law itself,
but because it's administration pre-
sents so many difficulties that it often
saves time and trouble for tax Off
Gals to use what is claimed to be
the alternative ordinary method of as
sessment.
When, in 1896, the government of
the Republic of Hawaii feared def
cheney of revenue, the Legislature
was called upon to amend the tax
laws. It's attention was directed to
| the fact that certain industries, nota-
bly, the sugar industry, were not as
sessed in any fair proportion to their
financial ability, relative to other
sources of public revenue. 1t was
thought that real estate was relative
ly fairly valued, but that values of
property commercially used should,
FLOR taxation purposes, bear a more
direct relation to the profits flowing
from that use.
The government seemed to be tao
lilly committed, then as now, to a
maximum property tax rate of one per
cent And evidently also assumed
that planters and merchants were not
prepared to submit to a direct income
tax at the high rtae which would of
I necessity be fixed to produce the de-
sired revenue, nor to welcome other
untried forms of direct taxation such
as Corporation" privilege" or
Occupation" taxes. Accordingly the
provisions of the existing law which
related to the modes of assessment
of real and personal property were in
geniously amended so as to reach in
directly, though drastically, the in
come of every business enterprise in
the Islands. Thus, as Turgot the
great Physiocratic statesman, once
said of a new revenue law in France,
sit achieved a brilliant success, as a
new way had been found to pluck the
goose without making it squeal" The
law, as then amended, reads as fol
lows:
"All real and personal property and
the interest of any person in any real
or personal property shall be assess
ed separately as to each item there
of for its full cash value"
(the special amendment being:)
provided, however, that in all
cases where real and personal pro,
perty or several classes or kinds or
parcels of real or personal property
respectively, are combined and made
the basis of an enterprise for profit,
the combined property forming such
basis of such enterprise for profit
shall be assessed as a whole on its
fair and reasonable aggregate value.
If the amplification had stopped at
this point the effect of the amend
ment would probably have been to
diminish rather than to increase the
public revenues for as the basis of
valuation Of all nrOnartV assessed nv