Hawaii Economy

The history of Hawaii can be traced through a succession of dominating industries: sandalwood, whaling, sugarcane, pineapple, military, tourism, and education. Since statehood was achieved in 1959, tourism has been the largest industry in Hawaii, contributing 24.3% of the Gross State Product (GSP) in 1997. New efforts are underway to diversify the economy. The total gross output for the state in 2003 was US$47 billion; per capita income for Hawaii residents was US$30,441.

Industrial exports from Hawaii include food processing and apparel. These industries play a small role in the Hawaii economy, however, due to the considerable shipping distance to the ports and population of the West Coast of the United States. Food exports include coffee, macadamia nuts, pineapple, livestock, and sugar cane. Agricultural sales for 2002, according to the Hawaii Agricultural Statistics Service, were US$370.9 million from diversified agriculture, US$100.6 million from pineapple, and US$64.3 million from sugarcane.

Hawaii is known for its relatively high per capita state tax burden. In the years 2002 and 2003, Hawaii residents had the highest state tax per capita at US$2,757 and US$2,838, respectively. This rate can be explained partly by the fact that services such as education, health care and social services are all rendered at the state level, as opposed to the municipal level in all other states.

Millions of tourists contribute to the collection figure by paying the general excise tax and hotel room tax; thus not all the taxes collected come directly from residents. Business leaders, however, have often considered the state's tax burden as being too high, contributing to both higher prices and the perception of an unfriendly business climate.[16] See the list of businesses in Hawaii for more information on commerce in the state.

Until recently, Hawaii was the only state in the U.S. that attempted to control gasoline prices through a Gas Cap Law. The law was enacted during a period when oil profits in Hawaii in relation to the mainland U.S. were under scrutiny, and sought to tie local gasoline prices to those of the mainland. The law took effect in September 2005 amid price fluctuations caused by Hurricane Katrina. The Hawaii state legislature suspended the law in April 2006.