Basic excise tax exemptions flatline for groceries and medical companies

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By Keli‘i Akina

As Shakespeare may need put it: “Buddies, neighbors, taxpayers, lend me your ears. I’ve come to bury the Hawaii Legislature, to not reward it. The unhealthy legal guidelines our legislators enact dwell after them, whereas the great are oft interred in committees.”


Keli’i Akina

That’s actually what occurred to the numerous good proposals to exempt primary requirements corresponding to groceries and physician visits from the state common excise tax. The measures have been among the many most promising reforms launched within the 2023 legislative session. But, all of them died whereas many unhealthy payments moved ahead.

It was a chance for the Legislature to move transformative laws that will assist carry down the price of dwelling and counter Hawaii’s crucial, typically heartbreaking scarcity of medical doctors. The GET proposals have been easy and clear — they usually even had the help of the governor.

Which made their demise much more irritating to witness.

A number of payments, together with HB1050 and SB1348, targeted on groceries and over-the-counter medicines, together with female hygiene merchandise. Eliminating the GET on groceries was a preferred a part of Gov. Josh Inexperienced’s election marketing campaign, because it represented a straightforward strategy to decrease the price of dwelling for thus many Hawaii households

A tax minimize for groceries would have made a distinction for Hawaii residents at each stage, not only one financial section. It additionally would have helped folks instantly, not subsequent yr when submitting their earnings taxes.

As for the failed proposals that exempt medical companies from the GET, a latest report from the Grassroot Institute of Hawaii confirmed that adopting such a coverage wouldn’t simply assist make healthcare extra reasonably priced, it could additionally make the state extra engaging to medical doctors.

Hawaii is one in every of solely two states to tax medical companies and the one state to tax companies rendered by way of Medicare, Medicaid and TRICARE. Native medical doctors have testified that the GET on medical companies makes it tough for personal practices to outlive in Hawaii, thereby contributing to the state’s physician scarcity.

However even with robust help from the medical group, not one of the payments that addressed the GET on medical companies made it by way of each chambers of the Legislature. These embody SB102, HB240, SB1128, HB662, and SB1035.

And it’s not like several of those GET proposals have been radical and even uncommon. In actual fact, most Individuals don’t should pay a gross sales tax on their groceries or medical companies.

Furthermore, Hawaii may simply afford these tax cuts, contemplating that the state is projected to have billions of {dollars} in surplus over the following few years.

It’s even potential that some, if not all, of the revenues misplaced because of the grocery and medical companies exemptions could be offset by revenues generated from elevated financial exercise ensuing from the tax cuts.

However, throughout this previous legislative session we heard all the justifications for the demise of the GET exemption payments — price range issues, we could be heading right into a recession, not sufficient knowledge about the price of the tax minimize, extra urgent points to be addressed, and many others., and many others.

However that’s all they have been … excuses. There’s a robust case to be made for these exemptions, they usually deserved a full and considerate listening to.

In equity, there have been a number of legislators who tried very exhausting to get these tax cuts handed, who clearly understood how vital they’re to Hawaii residents. To them, I say: “Thanks.”

Wanting forward, I’m hopeful extra legislators will probably be on board with these proposals subsequent yr, with much more public help to drive them ahead.

If you need to be taught extra about what transpired in the course of the newest legislative session, please attend one in every of our “legislative wrap-up” occasions this coming week.

Our coverage and advocacy groups will probably be sharing their frontline insights at luncheons on Maui, Hawaii Island and Oahu — on Tuesday, Wednesday and Thursday, respectively — and we’d like to see you there.


Keli‘i Akina is president and CEO of Grassroot Institute of Hawaii.