RELATING TO GENERAL EXCISE TAX REDUCTIONS.

HB933

HOUSE OF REPRESENTATIVES

H.B. NO.

933

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to general excise tax reductions
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION
1.
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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.
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Many Hawaii residents, including vulnerable
populations, suffer from food insecurity.
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A 2021 study by the University of Hawaii at
Manoa stated that forty-eight per cent of Hawaii families with children are
experiencing food insecurity.
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A 2021
Cornell study indicated that even the slightest increase in tax rate correlated
to an increased likelihood of food insecurity.

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The
legislature further finds that only thirteen states tax most foods purchased
for consumption at home from the state sales tax.
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Six of the states that tax groceries do so at
a reduced rate.
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Taxing the sale of
groceries is generally considered regressive and disproportionately hurts
working families because they spend a higher percentage of their income on
food.
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Hawaii's general excise 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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According
to the United States Department of Agriculture, a Hawaii family on a thrifty
food plan spends $1,794.60 per month on food.
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This family would pay over $800 a year in
state taxes on those groceries.
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The
thrifty food plan represents those on a limited budget.
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Even if this family is eligible for a refundable
food/excise tax credit, the family would likely get back less than one-half of
those state taxes paid on groceries.

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The legislature
has already recognized that certain items should be exempt from the general
excise tax, as evidenced by the existing general exemption for amounts received
by certain entities for selling prescription drugs.
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Lowering the tax rate on groceries and
nonprescription drugs will have an immediate positive impact on Hawaii's cost
of living by lowering the cost of these necessary items.

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Accordingly,
the purpose of this Act is to:

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(1)
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Establish
a reduction in the general excise tax rate on gross proceeds or income from 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 from the sale of nonprescription drugs; and

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(2)
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Require
the department of business, economic development and tourism to conduct an
economic cost-benefit analysis on the general excise reductions and submit a
report to the legislature.

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SECTION
2.
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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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"
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237-
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Reduced
rate; eligible groceries.
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(a)
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Notwithstanding section
237-13 to the contrary, beginning January 1, 2026,
there is hereby levied and shall be assessed and collected a tax
equivalent to
one-half per cent
less
than the rate that would have applied pursuant to section 237-13 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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(b)
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For the purposes of this section:

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"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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"Groceries" means any food or food
product for home consumption.
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"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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�237-
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Reduced rate; nonprescription drugs.
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(a)

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Notwithstanding section 237-13 to the
contrary,
beginning January 1, 2026,
there is hereby levied and shall be assessed and collected a tax equivalent
to
one-half per cent
less than
the rate that would have applied pursuant to section 237-13 of the gross
proceeds or income received from the sale of nonprescription drugs.

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(b)
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For
the purposes of this section:

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"Drug" means:

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(1)
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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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(2)
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Articles intended for use in the diagnosis,
cure, mitigation, treatment, or prevention of disease in humans;

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(3)
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Articles, other than food or clothing,
intended to affect the structure or any function of the body of humans; or

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(4)
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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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"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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SECTION 3.
�
(a)
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By
December 1, 2026, the department of business, economic development, and tourism
shall conduct an economic cost-benefit analysis on the general excise tax
reductions for calendar year 2026 as provided in section 2 of this Act.

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(b)
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The
department of business, economic development, and tourism
shall submit a
report of its findings from the economic cost-benefit analysis, including any recommendations
and proposed legislation, to the legislature no later than twenty days prior to
the convening of the regular session of
2027.

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SECTION 4.
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New statutory material is underscored.

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SECTION 5.
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This Act shall take effect on July 1, 2025.

INTRODUCED BY:

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Report Title:

General Excise Tax; Rate Reduction; SNAP; WIC; Groceries; Nonprescription
Drugs; DBEDT

Description:

Reduces the general excise tax rate on the gross proceeds
or income from the sale of groceries that are eligible under the supplemental
nutrition assistance program (SNAP) or special supplemental nutrition program
for women, infants, and children (WIC), regardless of the means of purchase and
the program eligibility of the purchaser.
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Reduces the general excise tax rate on the gross proceeds or income from
the sale of nonprescription drugs.
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Requires DBEDT to conduct an economic cost-benefit analysis on the GET
reductions.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.