Hawaii 2024 Regular Session

Hawaii Senate Bill SB1053 Compare Versions

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

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1	1	THE SENATE S.B. NO. 1053 THIRTY-SECOND LEGISLATURE, 2023 STATE OF HAWAII A BILL FOR AN ACT relating to GENERAL EXCISE TAX EXEMPTIONS. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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3	3	THE SENATE S.B. NO. 1053
4	4	THIRTY-SECOND LEGISLATURE, 2023
5	5	STATE OF HAWAII
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7	7	THE SENATE
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9	9	S.B. NO.
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11	11	1053
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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 GENERAL EXCISE TAX EXEMPTIONS.
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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 too many residents are struggling to pay for housing, food, and medication. According to data from the Missouri Economic Research and Information Center, Hawaii had the highest cost of living in 2019. Coupled with the high cost of living, the coronavirus disease 2019 (COVID-19) pandemic further exacerbated the problem of residents being unable to afford necessities like groceries. The COVID-19 pandemic led to over two hundred fifty thousand workers in Hawaii losing their jobs, leaving all those families to suffer financially. The legislature further finds that exempting groceries and nonprescription drugs from the general excise tax will help many families that have been negatively impacted by the COVID-19 pandemic and allow them to put food on the table and maintain the health of their families. Additionally, those who save money on groceries and nonprescription drug purchases will be able to spend that money elsewhere in the economy, thus allowing the money to continue to circulate, which will help many businesses and continue to generate revenue for the State. 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. Thirteen states impose levies on groceries. Seven states tax groceries at the level of the ordinary tax rate, including Alabama, Mississippi, South Dakota, Hawaii, Idaho, Kansas, and Oklahoma. The other six states, Arkansas, Illinois, Missouri, Tennessee, Utah, and Virginia, tax groceries at reduced rates. Grocery sales tax is often considered regressive and disproportionately hurts working families and may affect the quality, diversity, and even the amount of food they can afford to put on the table, especially during a pandemic. A recent study from the Charles H. Dyson School of Applied Economics and Management at Cornell University finds that even a slight grocery tax rate increase correlates to an increased likelihood of food insecurity and a higher risk of hunger in households. Exempting food and medicine from the general excise tax is a step that the State can take to substantially and positively combat food insecurity and the resiliency crisis. Taxing food not only hurts those living paycheck to paycheck, but it also erodes savings and investment opportunities for the middle class and makes Hawaii a much less desirable place to start a food-related business. This is therefore a priority issue for the State. The legislature also finds that Senate Bill No. 608, Regular Session of 2021 (Senate Bill No. 608), established a general excise tax exemption from the sale of certain groceries and nonprescription drugs. The department of taxation testified that Senate Bill No. 608 would cost the State an average of $230 million per year. More information is needed about how this estimate was derived. Furthermore, a more formal scoring of Senate Bill No. 608 is required to accurately estimate the projected fiscal impact to the State so that an appropriate offset in the form of reducing expenditures and for those savings to be spent elsewhere generating additional income from new food-based revenue sources may be developed. Accordingly, the purpose of this Act is to: (1) Establish a general excise tax exemption for the gross proceeds or income from the sale of groceries that are eligible under the Supplemental Nutrition Assistance Program or Special Supplemental Nutrition Program for Women, Infants, and Children; and (2) Establish a general excise tax exemption for the gross proceeds or income from 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- Exemption for eligible groceries. (a) 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. (b) 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 of taxation by rule or tax information 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- Exemption for nonprescription drugs. (a) 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. (b) 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 or animals; (3) Articles, other than food or clothing, intended to affect the structure or any function of the body of humans or animals; 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 January 1, 2024. INTRODUCED BY: _____________________________
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49	49	SECTION 1. The legislature finds that the cost of living in Hawaii is extremely high and too many residents are struggling to pay for housing, food, and medication. According to data from the Missouri Economic Research and Information Center, Hawaii had the highest cost of living in 2019. Coupled with the high cost of living, the coronavirus disease 2019 (COVID-19) pandemic further exacerbated the problem of residents being unable to afford necessities like groceries. The COVID-19 pandemic led to over two hundred fifty thousand workers in Hawaii losing their jobs, leaving all those families to suffer financially.
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51	51	The legislature further finds that exempting groceries and nonprescription drugs from the general excise tax will help many families that have been negatively impacted by the COVID-19 pandemic and allow them to put food on the table and maintain the health of their families. Additionally, those who save money on groceries and nonprescription drug purchases will be able to spend that money elsewhere in the economy, thus allowing the money to continue to circulate, which will help many businesses and continue to generate revenue for the State.
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53	53	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. Thirteen states impose levies on groceries. Seven states tax groceries at the level of the ordinary tax rate, including Alabama, Mississippi, South Dakota, Hawaii, Idaho, Kansas, and Oklahoma. The other six states, Arkansas, Illinois, Missouri, Tennessee, Utah, and Virginia, tax groceries at reduced rates. Grocery sales tax is often considered regressive and disproportionately hurts working families and may affect the quality, diversity, and even the amount of food they can afford to put on the table, especially during a pandemic.
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55	55	A recent study from the Charles H. Dyson School of Applied Economics and Management at Cornell University finds that even a slight grocery tax rate increase correlates to an increased likelihood of food insecurity and a higher risk of hunger in households. Exempting food and medicine from the general excise tax is a step that the State can take to substantially and positively combat food insecurity and the resiliency crisis. Taxing food not only hurts those living paycheck to paycheck, but it also erodes savings and investment opportunities for the middle class and makes Hawaii a much less desirable place to start a food-related business. This is therefore a priority issue for the State.
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57	57	The legislature also finds that Senate Bill No. 608, Regular Session of 2021 (Senate Bill No. 608), established a general excise tax exemption from the sale of certain groceries and nonprescription drugs. The department of taxation testified that Senate Bill No. 608 would cost the State an average of $230 million per year. More information is needed about how this estimate was derived. Furthermore, a more formal scoring of Senate Bill No. 608 is required to accurately estimate the projected fiscal impact to the State so that an appropriate offset in the form of reducing expenditures and for those savings to be spent elsewhere generating additional income from new food-based revenue sources may be developed.
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59	59	Accordingly, the purpose of this Act is to:
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61	61	(1) Establish a general excise tax exemption for the gross proceeds or income from the sale of groceries that are eligible under the Supplemental Nutrition Assistance Program or Special Supplemental Nutrition Program for Women, Infants, and Children; and
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63	63	(2) Establish a general excise tax exemption for the gross proceeds or income from the sale of nonprescription drugs.
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65	65	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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67	67	"§237- Exemption for eligible groceries. (a) 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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69	69	(b) For the purposes of this section:
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71	71	"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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73	73	"Groceries" means any food or food product for home consumption. "Groceries" may be further defined by the department of taxation by rule or tax information 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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75	75	§237- Exemption for nonprescription drugs. (a) 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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77	77	(b) For the purposes of this section:
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79	79	"Drug" means:
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81	81	(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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83	83	(2) Articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in humans or animals;
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85	85	(3) Articles, other than food or clothing, intended to affect the structure or any function of the body of humans or animals; or
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87	87	(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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89	89	"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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91	91	SECTION 3. New statutory material is underscored.
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95	95	SECTION 4. This Act shall take effect on January 1, 2024.
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99	99	INTRODUCED BY: _____________________________
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101	101	INTRODUCED BY:
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103	103	_____________________________
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109	109	Report Title: General Excise Tax; Exemption Groceries; Nonprescription Drugs; Exemption Description: Establishes a general excise tax exemption for the gross proceeds or income from 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. Establishes a general excise tax exemption for the gross proceeds or income from the sale of nonprescription drugs. Effective January 1, 2024. 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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115	115	Report Title:
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117	117	General Excise Tax; Exemption Groceries; Nonprescription Drugs; Exemption
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121	121	Description:
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123	123	Establishes a general excise tax exemption for the gross proceeds or income from 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. Establishes a general excise tax exemption for the gross proceeds or income from the sale of nonprescription drugs. Effective January 1, 2024.
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131	131	The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.