Relating To General Excise Tax Exemption For Food.
Impact
If passed, the bill would amend Chapter 237 of the Hawaii Revised Statutes, stating that the general excise tax will not apply to amounts received for food or food ingredients. However, the tax will still apply to prepared meals, with certain exceptions for seniors and disabled individuals receiving assistance. This provision aims to help those who are most vulnerable while encouraging affordable access to essential food items. The anticipated outcome is a reduction in food prices, indirectly benefiting families across the state who are struggling with high living expenses.
Summary
House Bill 687 seeks to exempt food from Hawaii's general excise tax, which is deemed regressive and disproportionately burdens low-income and middle-class families. The bill was introduced in recognition of the high cost of living in Hawaii, with the legislature finding that residents incur significant expenses on food. By exempting food from the general excise tax, the bill aims to alleviate some of these financial pressures, potentially saving an average two-person household over $400 annually. This exemption aligns Hawaii with the practices of 32 other states and Washington D.C., where food is exempt from sales taxes.
Contention
Debate surrounding HB 687 may center on its impact on state revenue and the potential strain this exemption could place on funding for essential services. Proponents argue that the relief offered to families outweighs the financial implications, while critics may express concerns over how the state will compensate for lost tax revenue. The discussions will likely also revolve around whether this bill adequately addresses the needs of all residents, particularly if certain exclusions might leave out some vulnerable populations.
Additional_points
The bill emphasizes that 'food' encompasses a range of items sold for human consumption, but specifically excludes prepared foods, alcoholic beverages, and dietary supplements. This is a critical distinction as it aims to clarify which products are affected by the tax exemption. It also highlights the importance of ensuring that vulnerable populations, such as seniors living on fixed incomes and individuals with disabilities, continue to receive access to affordable meals through designated meal programs.