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Senate bill cuts tax on groceries

By Associated Press

LAST UPDATED: 02:19 a.m. HST, Feb 08, 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 state Sen. Sam Slom, the chamber's lone Republican, who represents Hawaii Kai and introduced the proposal, Senate Bill 2169.

Keli‘i 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 Hawai‘i 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.

Sam Eifling, Associated Press

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boshio wrote:
With the loads of excess monies in the stae's pot, this bill should fly through passage, however, don't hold your breath. It is proven history that we will not get these kinds of tax relief benefit because it would take away too much money for them to spend on pet projects that will benefit the very few.
on February 8,2014 | 05:39AM
Larry01 wrote:
Okay, but what happens when the pendulum swings the other way (and it will)? What happens when the economy inevitably cycles downward? Raise the tax back?
on February 8,2014 | 08:24AM
st1d wrote:
hawaii's democrat regime is in a quandary over this bill. clearly, the people of hawaii were looted (overtaxed) by $844 million last year. yet, rather than return the money to the people, the democrats can only focus on moving the money to core democrat voters through extended entitlements, raising salaries of their cronies and creating new moocher (patronage) positions in government.

senator slim, the sole senate republican, introduced sb2169 to correct the suffering of hawaii's people forced to pay taxes on food and medicine. lowell kalapa would applaud this effort of relief for hawaii's people.

on February 8,2014 | 05:51AM
st1d wrote:
whoops, sorry, got an auto spell checker demon on my keyboard. should be senator slom.
on February 8,2014 | 05:54AM
Larry01 wrote:
Overtaxed? So when the state is in hard times and there are lower tax revenues than necessary, are the people of Hawaii undertaxed? You'd support raising tax rates then, right? I don't think so.
on February 8,2014 | 08:26AM
volcanohereicome wrote:
I'm ok with a lower tax on junk food, but there should not be any type of tax on food basics or on medical services.
on February 8,2014 | 04:06PM
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