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National group sees flaws in Hawaii's general excise tax

By Star-Advertiser Staff

LAST UPDATED: 01:30 p.m. HST, Aug 28, 2013

Hawaii’s general excise tax may be relatively low when compared with sales tax rates in other states, but the way the GET is structured makes it a greater burden on economic activity than the headline number suggests, according to a report released today by the Tax Foundation.

Hawaii’s statewide 4 percent GET, paired with an average 0.35 percent local tax rate, put the state’s combined rate at 4.35 percent, the 46th lowest among the 50 states and the District of Columbia, the Tax Foundation officials said in the semi-annual report.

However, unlike most other states that charge a sales tax only when a consumer purchases merchandise from a retailer, Hawaii imposes the GET on businesses every time a good or service  changes hands throughout the supply chain.

“Experts generally agree that Hawaii has the broadest sales tax in the United states, taxing many products multiple times,” according to the report.

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entrkn wrote:
Government worker pensions...?
on August 28,2013 | 02:07PM
HealthyandHappy wrote:
Don't be concerned about them, there is a lock box for that. Just keep voting democrat.
on August 28,2013 | 02:51PM
1local wrote:
unions and democrats = EBT for all...
on August 28,2013 | 07:06PM
Jerry_D wrote:
Most consumers are unaware of how our GET works. Basically, for EVERY financial transactions made (with few exceptions), the state claims 4%. If this transaction is conducted on Oahu, then another half-percent is claimed by the City and County of Honolulu (therefore, the GET rate on Oahu is effectively 4.5%). So if Joe-the-manufacturer sells Sally-the-carpenter a cabinet for $100, then Joe must pay $4.50 in GET. If Sally takes that cabinet, marks it up by 20% and sells it to the homeowner for $120.00, then she must pay $5.40 in GET. That's a total of $9.90 in taxes paid on this item that retailed for $120...which is the equivalent of paying 8% in sales taxes. Collectively, that's quite a lot of money our state is collecting in taxes...higher than California's sales tax rate, for instance. And Hawaii collects that money on ALL transactions, food and nonfood alike.
on August 28,2013 | 02:20PM
hanaboy wrote:
Actually, Oahu's GET is 4.712%.
on August 28,2013 | 03:32PM
atilter wrote:
multiplied by EVERY TRANSACTION!
on August 28,2013 | 05:13PM
Jerry_D wrote:
Actually, it is not. Oahu's GET is 4.5%. However, retailers are allowed to also recoup (or "pass on") the GET that will be applied towards the original GET collected...and this equates to a perceived rate of 4.712% for us, the consumers.
on August 28,2013 | 06:30PM
SandBar wrote:
Only in Hawaii do businesses pay tax on tax collected. Keep voting Democrat folks.
on August 28,2013 | 07:13PM
Big C wrote:
Wow, surely took the National group a long time to discovery the flaw. This problem was known in the Hawaii business world decades ago. That's why it is called an excise tax, not a sales tax. Too bad the state is so greedy that it also applies the excise tax on the final consumer for necessities, ie Medical and Groceries.
on August 28,2013 | 02:27PM
loquaciousone wrote:
Hawaii does not have a sales tax. It's an excise tax and it can quickly raise the cost of goods and services because it taxes itself. An example is that business have to pay tax on the tax they collect. Isn't that insane?
on August 28,2013 | 02:49PM
livinginhawaii wrote:
Technically its not even a true excise tax. The correct term is transactions tax because it applies to everything that is not exempted in the law.
on August 28,2013 | 03:14PM
loquaciousone wrote:
I would agree with you except that excise tax is described as an indirect tax, which is exactly what we have in Hawaii.
on August 28,2013 | 03:34PM
Pocho wrote:
Boy, can you imagine what the State of Hawaii Government would be at without all them xtra GET tax.
on August 28,2013 | 02:56PM
First-Responder wrote:
Do you think? We are by far, the most taxed people in the nation. As a business owner, I avoid the burden of excise tax by buying many of my goods on the mainland. This is BAD! If taxes were more reasonable, I would buy all of my goods from local suppliers (local jobs).
on August 28,2013 | 02:56PM
AhiPoke wrote:
This is not news to Hawaii businesses who have dealt with it for decades. Many people think it's shipping costs that account for the majority of the cost differences between us and the mainland. While shipping is a significant factor, in many cases the compounded GET is even greater. Hawaii GET is one of the major factors for Hawaii being called "tax hell".
on August 28,2013 | 03:06PM
livinginhawaii wrote:
Thank you for pointing this out to our greedy, overpaid politicians who created this economic disaster in the first place.
on August 28,2013 | 03:16PM
SandBar wrote:
You mean government unions.
on August 28,2013 | 07:17PM
atilter wrote:
a subtle political "multiplier" applied to generate the funds needed to operate our "shadowy" govermental activities - politically motivated and perpetrated entitlements written into our laws by a "paid" legislature!!!
on August 28,2013 | 05:11PM
tiki886 wrote:
This comment has been deleted.
on August 28,2013 | 05:33PM
soundofreason wrote:
Can you just imagine the spending shock our state govt would go through if it were treated like a REAL sales tax? Half their revenue would be gone. Wonder why there is so much resistance?
on August 28,2013 | 06:31PM
Kuihao wrote:
Is the "Tax Foundation" aware that the GET for wholesale transactions only 0.5%. This is the rate if the purchaser plans to re-sell the item. So this article (and most of the comments thereto) appear to be seriously uninformed.
on August 28,2013 | 09:37PM
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