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Hawaii weighs lifting taxes on groceries, rent

By Sam Eifling

Associated Press

LAST UPDATED: 06:53 a.m. HST, Feb 07, 2014

Hawaii would exempt groceries and medical services from its general excise tax if bills advancing through the Legislature become law.

Lawmakers heard a chorus of support Thursday from policy analysts, poverty advocates and the food industry for the proposal to stop taxing groceries.

It is not yet known what such a cut would cost the state. The initial estimate is $200 million for fiscal 2015 and $490 million in subsequent years, said Joshua Wisch, deputy director of the state Department of Taxation.

"The one thing we do know is, it's costing our residents, in particular our low-income residents, a great deal," said Sen. Sam Slom, the chamber's lone Republican member, who represents Hawaii Kai and introduced the proposal, Senate Bill 2169.

Kelii Akina, president of the Grassroot Institute of Hawaii, told the Senate Committee on Human Services that a family of four in Hawaii spends an average of $1,000 a month on groceries. Cutting state taxes, he said, would save such a family $450 a year.

Thirty-six states do not tax groceries, Lauren Zirbel, the executive director of the Hawaii Food Industry Association, testified. Seven of the remaining 14 impose lower tax rates than Hawaii, she said.

In written testimony opposing the measure, the Tax Foundation of Hawaii argued that an across-the-board cut to the excise tax rate would save taxpayers money while avoiding the arduous process of defining which food is eligible for the exemption.

The committee also advanced SB 2206, which would establish an earned income credit and cut tax liability for people who earn less than 125 percent of the federal poverty guideline.

Hawaii's high cost of living and high poverty rate make such a measure necessary, Jenny Lee, an attorney with the Hawaii Appleseed Center for Law and Economic Justice, told the committee.

"It's simply counterintuitive and inefficient policy to tax households deeper into poverty and then have expensive social services provided in order to try to alleviate the impact of poverty," she said.

The state would double the tax credits it offers to renters who make less than $30,000 a year, under another bill the committee advanced, SB 2835.

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Senate bill cuts tax on groceries

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walrus808 wrote:
It's about time! Basic necessities such as housing, food and medicine should never be taxed.
on February 7,2014 | 06:09AM
false wrote:
on February 7,2014 | 09:23AM
MizuInOz wrote:
Ditto! ^ What he said...
on February 7,2014 | 06:07PM
bumba wrote:
"In written testimony opposing the measure, the Tax Foundation of Hawaii argued that an across-the-board cut to the excise tax rate would save taxpayers money while avoiding the arduous process of defining which food is eligible for the exemption." WRONG. Cutting the excise tax would save the business' money. There's no guarantee that the business' would pass the savings to the consumer. Cut the tax where it counts, at the "regular people" level.
on February 7,2014 | 06:15AM
Kai37 wrote:
Bumba - Actually, you are mistaken that the business could just pocket the savings. Unlike most other sales tax in other states, GE Tax is a seller's tax. However, sellers are allowed to pass on that cost to the buyer which is why we as consumers pay it. If the grocery store doesn't have to pay GE tax anymore, then by law they cannot assess the GE tax to the consumers.
on February 7,2014 | 07:50AM
palani wrote:
Too much to hope for from the tax-and-spenders long in control of our government. The general excise tax on groceries, as well as the income tax levy on even our lowest income wage earners, has earned Hawaii the reputation as one of the most regressive states when it comes to tax policy.
on February 7,2014 | 06:24AM
96706 wrote:
Oh yeah suuuure - this is only a dream. How else is the STATE Hawaii going to make MORE money off of the backs of the low and middle income?
on February 7,2014 | 06:41AM
HAJAA1 wrote:
Should have done this years ago. And to make up for it - add more tax to cigarettes. And about the low income folks having to pay tax on groceries? Not happening because many are on welfare benefits and food stamps are not taxed.
on February 7,2014 | 06:45AM
hawn wrote:
I don't believe it, the legislature actually wants to pass a bill that benefits the people! Hmm...something smells here.
on February 7,2014 | 06:51AM
mhall wrote:
Too good to be true. Willing to bet it won't pass.
on February 7,2014 | 07:16AM
st1d wrote:
It takes a republican to offer tax relief for the people of Hawaii. Mahalo, senator Slom.
on February 7,2014 | 07:17AM
Maneki_Neko wrote:
Will any landlord lower the rent if the GET tax is removed?

Nope, nope, nope. Just a nice $4% bump in income.

on February 7,2014 | 07:36AM
ready2go wrote:
The shipping costs are also killing us in Hawaii
on February 7,2014 | 07:38AM
serious wrote:
Certainly they are. Jones Act--just effects Hawaii, Alaska and Puerto Rico---the latter looks like it is going into bankruptcy while the first two have the highest cost of living in the USA. But the shipping industry campaign support the politicians--the heck with the taxpayers!!
on February 7,2014 | 11:30AM
Skyler wrote:
Actually, we're 3rd on the list of high cost of living - and the Jones Act isn't 100% to blame. Desirability of our tropical islands is a big part of it.

But I agree some modifications should be made - just not sure which ones.
on February 7,2014 | 01:02PM
username_required wrote:
Do it. Low and middle income folks will find another use for the money saved, which will still be taxed (hopefully).
on February 7,2014 | 07:47AM
Kai37 wrote:
I'm all for this reduction in taxes, however, how is the government going to make up the lost revenues? State's pension is underfunded, roads need repairs, unions and employees need raises, capital projects need to be done, funding for invasive species, funding for cooling classrooms, etc. We are already used to living with this cost so maybe better to leave it be?
on February 7,2014 | 07:54AM
localguy wrote:
Kai37- What is with this, "unions and employees need raises"? Really? No, no more raises are needed. Get the pension cost and pension spiking under control first. Unions already leach too much money from taxpayers.
on February 7,2014 | 09:05AM
Kai37 wrote:
That's a different debate - I was just listing examples of rising costs or things money will be needed for. The main point I wanted to make was that there are many needs so it will be hard to fund them if the state reduces their revenues. Once you give it's hard to take back, so if the state needs money later on (say several years later), it will be hard for the state to ask for the GE tax back.
on February 7,2014 | 09:50AM
kiragirl wrote:
Yep. Where is that $200 million gonna come from? I would be surprised if this bill passed plus a Republican bill in a Democratic controlled legislature. No way.
on February 7,2014 | 11:15AM
South76 wrote:
I remember many years ago, people in Hawaii were able to deduct medical and food tax when filing tax return and when the Japanese market dove, those perks were taken away because of dwindling tax revenue.
on February 7,2014 | 01:16PM
HAJAA1 wrote:
Unions don't need anything except a reality check. Lazy crybabies.
on February 7,2014 | 09:16AM
Bdpapa wrote:
Is Kelii Akina fro real? A family of 4 spending $1000 on food is outrageous. They must be on Food Stamps, or have a lot of money.
on February 7,2014 | 08:00AM
Larry01 wrote:
"They must be on Food Stamps, or have a lot of money." Huh? So either they're poor or they're rich? Or do you mean $1000 in addition to the food stamps? Sorry, I don't understand if you think $1000 is a lot or a little.
on February 7,2014 | 08:25AM
Bdpapa wrote:
That a lot for food.
on February 7,2014 | 12:18PM
Skyler wrote:
Agree. But you find some families can spend a bundle on food without even trying hard - and you see the results.
on February 7,2014 | 01:04PM
HAJAA1 wrote:
I totally agree. With all the leftovers my family of four enjoy, I spend nowhere near $1000 a month on grocery.
on February 7,2014 | 09:18AM
gmejk wrote:
Probably a family of four living in Kahala and shopping at Whole Foods.
on February 7,2014 | 09:26AM
frontman wrote:
The only ones spending a $1000 a month are the ones using food stamps and YOU are footing the bill.
on February 7,2014 | 10:40AM
AhiPoke wrote:
Great idea but it won't pass. Until the legislature grows the nuts it'll take to reduce the waste in government (ie. take on the unions) this makes no sense. All it will do is generate a deficit. This is all about posturing for the next election later this year.
on February 7,2014 | 08:06AM
Newsizs wrote:
To Maneki_Neko No proposal to lower GET on rent, proposal is to increase tax credit for low-income tax filers. You have been misled by the article's vague title and by not reading the article to the end. Maneki_Neko wrote: Will any landlord lower the rent if the GET tax is removed? Nope, nope, nope. Just a nice $4% bump in income.
on February 7,2014 | 09:01AM
oreoman wrote:
If you don't want to get taxed on your groceries, you can go to Chinatown.
on February 7,2014 | 09:51AM
frontman wrote:
They won't but they want the taxpayers to have hope for a day or two. Medicine is another that should NOT be taxed.
on February 7,2014 | 10:39AM
Anonymous wrote:
Tutu Would like to see this happen. Pleased to see the politicians are able to see benefits that effect everyone.
on February 7,2014 | 10:48AM
konag43 wrote:
they will get it from someplace else like more taxes on vehicle registation. higher fees on droivers lic. and etc.
on February 7,2014 | 10:59AM
Big C wrote:
This is a GIANT step in the right direction.
on February 7,2014 | 11:19AM
MakaniKai wrote:
COPY / PASTE from: http://the.honoluluadvertiser.com/article/2007/Jan/22/br/br9512086473.html Governor Lingle’s State of the State address: I am proposing the Taxpayer Protection Act of 2007 that will require the Director of Taxation annually to adjust these three factors. It is also time for us to take the first step to eliminate the tax on the food that families eat at home. I am proposing that we exempt 11 different foods from the general excise tax, including milk, eggs, cereals and baby formula—foods recognized by the USDA as healthy and basic to a child's diet. This will save the people of Hawai'i an estimated $40 million per year. To give extra tax relief to families, I am proposing the 'Ohana Tax Reduction Act of 2007. GOOD READ: http://hilo.hawaii.edu/academics/hohonu/documents/Vol06x26ToBeorNotToBe.pdf
on February 7,2014 | 11:26AM
cojef wrote:
In California we do not ant taxes on food, but sales taxes on other sales, again depending on the county is above 7.5%. That's pretty hefty. Lived in Texas over 3 years where there is no income taxes but sales taxes on everything, still lower than California.
on February 7,2014 | 11:37AM
Skyler wrote:
Makes SO much sense! Nah... too much sense.
on February 7,2014 | 12:47PM
richierich wrote:
I predict that this bill will die in committee.
on February 7,2014 | 01:23PM
Anonymous wrote:
Never will happen.
on February 7,2014 | 01:53PM
rayhawaii wrote:
They will cut tax on groceries but raise taxes a notch on something else. Happens all the time.
on February 7,2014 | 02:29PM
Ichigo wrote:
Yes they will just increase the taxes on the tourists' hotel and rental cars, etc. and brag about how "Visitor Revenues" are up again!
on February 7,2014 | 04:10PM
Kaneahi wrote:
Does anyone truly believe that the state is going to give up 490 Million dollars? Ok, let's say this is passed. So where is the Governor going to go to cut back $490 million dollars... Oh right... I forgot... he won't... they'll just up the tax on property taxes. Let's soak the citizens of Hawaii who own property... Come on, you know it's true.
on February 7,2014 | 05:39PM
whs1966 wrote:
I will believe this happens when the bill moves through the leg & the gov signs it into law. Until then, it's merely talk.
on February 7,2014 | 06:18PM
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