Hawaii 2023 Regular Session

Hawaii House Bill HB945 Compare Versions

Only one version of the bill is available at this time.

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1	1	HOUSE OF REPRESENTATIVES H.B. NO. 945 THIRTY-SECOND LEGISLATURE, 2023 STATE OF HAWAII A BILL FOR AN ACT relating to the general excise tax. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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3	3	HOUSE OF REPRESENTATIVES H.B. NO. 945
4	4	THIRTY-SECOND LEGISLATURE, 2023
5	5	STATE OF HAWAII
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7	7	HOUSE OF REPRESENTATIVES
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9	9	H.B. NO.
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13	13	THIRTY-SECOND LEGISLATURE, 2023
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17	17	STATE OF HAWAII
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31	31	A BILL FOR AN ACT
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37	37	relating to the general excise tax.
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43	43	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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47	47	SECTION 1. The legislature finds that the cost of living in Hawaii is extremely high and many residents are struggling to pay for food, medication, housing, and other necessities. Many Hawaii residents, including vulnerable populations, suffer from food insecurity. A recent 2021 study by the University of Hawaii at Manoa stated that forty-eight per cent of Hawaii families with children are experiencing food insecurity. A 2021 Cornell study indicates that taxes on food correlate to food insecurity. The study, co-authored by Harry Kaiser, the Gellert Family Professor at the Cornell Charles H. Dyson School of Applied Economics and Management, finds that even a slight grocery tax rate increase could be problematic for many. "An increase of 1 per cent to 4 per cent may sound small, but after several trips to the grocery store, the extra costs can create serious burdens for the lowest-income families", Kaiser said. The study found that even the slightest increase in tax rate correlated to an increased likelihood of food insecurity. The legislature further finds that thirty-two states, plus the District of Columbia, currently exempt most foods purchased for consumption at home from the state sales tax. Of those states that tax groceries, many do so at a reduced rate. Taxing the sales of groceries is generally considered regressive and disproportionately hurts working families because they spend a higher percentage of their income on food. Hawaii's tax on groceries negatively affects not only the amount of food that Hawaii families can afford, but also the quality and diversity of their food choices. According to the United States Department of Agriculture, a Hawaii family on a thrifty food plan spends $1,794.60 per month on food. This family would pay over $800 a year in state taxes on those groceries. The thrifty food plan represents those on a limited budget. Even if this family is eligible for a food tax rebate, they would likely get back less than half of those state taxes paid on groceries. The legislature further finds that inflation, high cost of living, the COVID-19 pandemic, and food insecurity negatively impact the State's resiliency and disaster preparedness. For many families, it is not economically feasible to purchase and store the recommended two-week supply of emergency food and essentials. The legislature further finds that taxing food not only hurts Hawaii consumers but also makes Hawaii a much less desirable place to start a food-related business. Exempting certain groceries from the general excise tax would make Hawaii's food supply chain more equitable and can help the State meet the goal of increasing the availability of locally grown and manufactured food. The legislature further finds that the department of taxation verbally testified on a previously considered bill that wholly exempting the sale of groceries eligible under the supplemental nutrition assistance program or special supplemental nutrition program for women, infants, and children would cost the State about $230,000,000 per year. By proceeding with a one per cent reduction on grocery taxes each year as described in this Act, the economic impact on the state budget would be lessened, allowing the State time to develop appropriate offsets. The legislature has already recognized that certain items should be exempt from the general excise tax, as evidenced by the prescription drug exemption. Lowering the tax rate on groceries and nonprescription drugs, and eventually exempting them from the general excise tax, will have an immediate positive impact on Hawaii's cost of living by lowering the cost of these necessary items. This will provide relief and help to many families that have been impacted negatively by the COVID-19 pandemic and allow them to put more food on the table and better maintain the health of their families. In addition, the money saved by Hawaii consumers in taxes can continue to circulate in the economy, helping businesses and generating revenue for the State. Accordingly, the purpose of this Act is to: (1) Establish a general excise tax reduction and eventual exemption for the sale of groceries that are eligible for purchase under the supplemental nutrition assistance program or special supplemental nutrition program for women, infants, and children; and (2) Establish a general excise tax reduction and eventual exemption for the sale of nonprescription drugs. SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows: "§237- Reduced rate; exemption; supplemental nutrition assistance program-eligible groceries. (a) Notwithstanding section 237-13, there is hereby levied and shall be assessed and collected a tax equivalent to: (1) In calendar year 2024, three per cent; (2) In calendar year 2025, two per cent; and (3) In calendar year 2026, one per cent, of the gross proceeds or income received from the sale of all groceries eligible for purchase under the supplemental nutrition assistance program and special supplemental nutrition program for women, infants, and children within the State, regardless of the means of purchase and the eligibility of the purchaser for supplemental nutrition assistance program or special supplemental nutrition program for women, infants, and children benefits. (b) Beginning January 1, 2027, there shall be exempted from, and excluded from the measure of, the taxes imposed by this chapter all of the gross proceeds or income received from the sale of all groceries eligible for purchase under the supplemental nutrition assistance program and special supplemental nutrition program for women, infants, and children within the State, regardless of the means of purchase and the eligibility of the purchaser for supplemental nutrition assistance program or special supplemental nutrition program for women, infants, and children benefits. (c) For the purposes of this section: "Food" or "food product" means substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value. "Groceries" means any food or food product for home consumption. "Groceries" may be further defined by the department by rule through the enumeration of items in rules or tax informational release; provided that the department shall consult with the federal Food and Nutrition Service of the United States Department of Agriculture in further defining the term "groceries" for purposes of the supplemental nutrition assistance program and special supplemental nutrition program for women, infants, and children. §237- Reduced rate; exemption; nonprescription drugs. (a) Notwithstanding section 237-13, there is hereby levied and shall be assessed and collected a tax equivalent to: (1) In calendar year 2024, three per cent; (2) In calendar year 2025, two per cent; and (3) In calendar year 2026, one per cent, of the gross proceeds or income received from the sale of nonprescription drugs. (b) Beginning January 1, 2027, there shall be exempted from, and excluded from the measure of, the taxes imposed by this chapter all of the gross proceeds or income received from the sale of nonprescription drugs. (c) For the purposes of this section: "Drug" means: (1) Articles recognized in the official United States Pharmacopoeia, official United States Pharmacopoeia Dispensing Information, official Homeopathic Pharmacopoeia of the United States, or official National Formulary, or any supplement to any of these publications; (2) Articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in humans; (3) Articles, other than food or clothing, intended to affect the structure or any function of the body of humans; or (4) Articles intended for use as a component of any article specified in paragraph (1), (2), or (3); provided that the term "drug" does not include devices or their components, parts or accessories, cosmetics, or liquor as defined in section 281-1. "Nonprescription drug" means any packaged, bottled, or nonbulk chemical, drug, or medicine that may be lawfully sold without a practitioner's order." SECTION 3. New statutory material is underscored. SECTION 4. This Act shall take effect on July 1, 2023. INTRODUCED BY: _____________________________
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49	49	SECTION 1. The legislature finds that the cost of living in Hawaii is extremely high and many residents are struggling to pay for food, medication, housing, and other necessities. Many Hawaii residents, including vulnerable populations, suffer from food insecurity. A recent 2021 study by the University of Hawaii at Manoa stated that forty-eight per cent of Hawaii families with children are experiencing food insecurity. A 2021 Cornell study indicates that taxes on food correlate to food insecurity. The study, co-authored by Harry Kaiser, the Gellert Family Professor at the Cornell Charles H. Dyson School of Applied Economics and Management, finds that even a slight grocery tax rate increase could be problematic for many. "An increase of 1 per cent to 4 per cent may sound small, but after several trips to the grocery store, the extra costs can create serious burdens for the lowest-income families", Kaiser said. The study found that even the slightest increase in tax rate correlated to an increased likelihood of food insecurity.
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51	51	The legislature further finds that thirty-two states, plus the District of Columbia, currently exempt most foods purchased for consumption at home from the state sales tax. Of those states that tax groceries, many do so at a reduced rate. Taxing the sales of groceries is generally considered regressive and disproportionately hurts working families because they spend a higher percentage of their income on food. Hawaii's tax on groceries negatively affects not only the amount of food that Hawaii families can afford, but also the quality and diversity of their food choices.
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53	53	According to the United States Department of Agriculture, a Hawaii family on a thrifty food plan spends $1,794.60 per month on food. This family would pay over $800 a year in state taxes on those groceries. The thrifty food plan represents those on a limited budget. Even if this family is eligible for a food tax rebate, they would likely get back less than half of those state taxes paid on groceries.
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55	55	The legislature further finds that inflation, high cost of living, the COVID-19 pandemic, and food insecurity negatively impact the State's resiliency and disaster preparedness. For many families, it is not economically feasible to purchase and store the recommended two-week supply of emergency food and essentials.
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57	57	The legislature further finds that taxing food not only hurts Hawaii consumers but also makes Hawaii a much less desirable place to start a food-related business. Exempting certain groceries from the general excise tax would make Hawaii's food supply chain more equitable and can help the State meet the goal of increasing the availability of locally grown and manufactured food.
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59	59	The legislature further finds that the department of taxation verbally testified on a previously considered bill that wholly exempting the sale of groceries eligible under the supplemental nutrition assistance program or special supplemental nutrition program for women, infants, and children would cost the State about $230,000,000 per year. By proceeding with a one per cent reduction on grocery taxes each year as described in this Act, the economic impact on the state budget would be lessened, allowing the State time to develop appropriate offsets.
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61	61	The legislature has already recognized that certain items should be exempt from the general excise tax, as evidenced by the prescription drug exemption. Lowering the tax rate on groceries and nonprescription drugs, and eventually exempting them from the general excise tax, will have an immediate positive impact on Hawaii's cost of living by lowering the cost of these necessary items. This will provide relief and help to many families that have been impacted negatively by the COVID-19 pandemic and allow them to put more food on the table and better maintain the health of their families. In addition, the money saved by Hawaii consumers in taxes can continue to circulate in the economy, helping businesses and generating revenue for the State.
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63	63	Accordingly, the purpose of this Act is to:
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65	65	(1) Establish a general excise tax reduction and eventual exemption for the sale of groceries that are eligible for purchase under the supplemental nutrition assistance program or special supplemental nutrition program for women, infants, and children; and
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67	67	(2) Establish a general excise tax reduction and eventual exemption for the sale of nonprescription drugs.
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69	69	SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:
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71	71	"§237- Reduced rate; exemption; supplemental nutrition assistance program-eligible groceries. (a) Notwithstanding section 237-13, there is hereby levied and shall be assessed and collected a tax equivalent to:
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73	73	(1) In calendar year 2024, three per cent;
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75	75	(2) In calendar year 2025, two per cent; and
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77	77	(3) In calendar year 2026, one per cent,
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79	79	of the gross proceeds or income received from the sale of all groceries eligible for purchase under the supplemental nutrition assistance program and special supplemental nutrition program for women, infants, and children within the State, regardless of the means of purchase and the eligibility of the purchaser for supplemental nutrition assistance program or special supplemental nutrition program for women, infants, and children benefits.
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81	81	(b) Beginning January 1, 2027, there shall be exempted from, and excluded from the measure of, the taxes imposed by this chapter all of the gross proceeds or income received from the sale of all groceries eligible for purchase under the supplemental nutrition assistance program and special supplemental nutrition program for women, infants, and children within the State, regardless of the means of purchase and the eligibility of the purchaser for supplemental nutrition assistance program or special supplemental nutrition program for women, infants, and children benefits.
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83	83	(c) For the purposes of this section:
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85	85	"Food" or "food product" means substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value.
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87	87	"Groceries" means any food or food product for home consumption. "Groceries" may be further defined by the department by rule through the enumeration of items in rules or tax informational release; provided that the department shall consult with the federal Food and Nutrition Service of the United States Department of Agriculture in further defining the term "groceries" for purposes of the supplemental nutrition assistance program and special supplemental nutrition program for women, infants, and children.
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89	89	§237- Reduced rate; exemption; nonprescription drugs. (a) Notwithstanding section 237-13, there is hereby levied and shall be assessed and collected a tax equivalent to:
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91	91	(1) In calendar year 2024, three per cent;
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93	93	(2) In calendar year 2025, two per cent; and
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95	95	(3) In calendar year 2026, one per cent,
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97	97	of the gross proceeds or income received from the sale of nonprescription drugs.
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99	99	(b) Beginning January 1, 2027, there shall be exempted from, and excluded from the measure of, the taxes imposed by this chapter all of the gross proceeds or income received from the sale of nonprescription drugs.
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101	101	(c) For the purposes of this section:
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103	103	"Drug" means:
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105	105	(1) Articles recognized in the official United States Pharmacopoeia, official United States Pharmacopoeia Dispensing Information, official Homeopathic Pharmacopoeia of the United States, or official National Formulary, or any supplement to any of these publications;
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107	107	(2) Articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in humans;
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109	109	(3) Articles, other than food or clothing, intended to affect the structure or any function of the body of humans; or
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111	111	(4) Articles intended for use as a component of any article specified in paragraph (1), (2), or (3); provided that the term "drug" does not include devices or their components, parts or accessories, cosmetics, or liquor as defined in section 281-1.
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113	113	"Nonprescription drug" means any packaged, bottled, or nonbulk chemical, drug, or medicine that may be lawfully sold without a practitioner's order."
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115	115	SECTION 3. New statutory material is underscored.
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117	117	SECTION 4. This Act shall take effect on July 1, 2023.
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121	121	INTRODUCED BY: _____________________________
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123	123	INTRODUCED BY:
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125	125	_____________________________
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131	131	Report Title: General Excise Tax; SNAP; WIC; Groceries; Nonprescription Drugs; Exemption Description: Reduces, then later exempts, the tax collected on the sale of groceries that are eligible under the supplemental nutrition assistance program or special supplemental nutrition program for women, infants, and children, regardless of the means of purchase and the program eligibility of the purchaser. Reduces, then later exempts, the tax collected for the sale of nonprescription drugs. The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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137	137	Report Title:
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139	139	General Excise Tax; SNAP; WIC; Groceries; Nonprescription Drugs; Exemption
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143	143	Description:
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145	145	Reduces, then later exempts, the tax collected on the sale of groceries that are eligible under the supplemental nutrition assistance program or special supplemental nutrition program for women, infants, and children, regardless of the means of purchase and the program eligibility of the purchaser. Reduces, then later exempts, the tax collected for the sale of nonprescription drugs.
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153	153	The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.