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National group sees flaws in Hawaii’s general excise tax

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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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