Question: Are stores supposed to charge tax on the bags? Some stores are charging me 15 cents, and some are charging me 16 cents. What’s up?
Answer: The new mandatory charge on Oahu for a bag to transport groceries or other merchandise (with some exceptions) is subject to general excise tax (GET) like other retail purchases. In this case, the purchase is a bag to carry other purchases. The minimum price per bag is 15 cents, but businesses may charge more if they wish, plus tax.
The GET is a tax on businesses, which are required to pay it. They may pass the cost on to customers, but are not required to do so. Several readers said they’ve been taxed inconsistently. Some businesses may be failing to collect GET as required, or they may be collecting it without visibly passing the cost on to the customer (which would be unusual, in our experience).
Deborah Kwan, a spokeswoman for the Hawaii Department of Taxation, provides more information:
“From the Tax Department’s standpoint, the 15-cent charge for bags on Oahu is treated as part of a businesses’ taxable gross receipts subject to the 4 percent general excise tax and the half-percent county surcharge for the City and County of Honolulu, for a total of 4.5 percent. The 15 cents for a bag is not a tax or fee to be paid to the state or county.
“Oahu businesses may pass on the 4.5 percent GET to their customers by charging a maximum rate of 4.712 percent. The maximum rate is greater than the tax rate because businesses are taxed on their gross receipts, including GET that is charged to customers. This rate allows businesses to cover their entire GET expense.”
At the minimum bag charge of 15 cents, 4.712 percent GET is less than a penny (.007 cents). On a sales receipt, GET usually is calculated once on all items purchased, rather than by item. Without seeing your receipt, we can’t tell if one retailer charged you 16 cents for the bag, or 15 cents plus tax.
Some readers say the mandatory charge for something businesses formerly provided as a customer service amounts to a tax that should not be taxed again. That’s not how the city or state see it. The municipal law forces businesses to charge customers for bags and sets the minimum price, but it doesn’t force customers to buy bags — they can bring their own or go without. Businesses may charge more than the minimum and, as Kwan noted, the customer does receive merchandise (a bag) in exchange for the payment.
As for revenue, the GET goes to government coffers and any profits from bag sales stay with the business.
However, we’re hearing that rather than raking in cash selling bags, merchants are spending more to deter shoplifting — a security task complicated by the fact that legitimate shoppers exit with merchandise in their hands because they didn’t bring a bag and didn’t buy one. Customers who eschew bags are advised to keep receipts visible to avoid being mistaken for thieves.
Auwe
On July 23, I saw a teenage couple walking toward Nordstrom. They were holding hands. Nothing wrong with that, but what they were doing with their opposing hands made my mouth drop. They were each holding their smartphones and texting! Instead of focusing each other, whispering sweet nothings or kissing each other on the cheek, they were texting! I could tell they were texting, because their thumbs were tapping away. They weren’t scrolling. They weren’t looking for places to eat at Ala Moana. They were texting! If that’s where human relationships and interactions are going, count me out. That bordered between bizarre and “you gotta be kidding me.” My mouth is still agape! — Robert S.
Write to “Kokua Line” at Honolulu Star-Advertiser, 7 Waterfront Plaza, Suite 210, 500 Ala Moana Blvd., Honolulu 96813; call 529-4773; fax 529-4750; or email kokualine@staradvertiser.com.
