SB 194: RELATING TO GENERAL EXCISE TAX EXEMPTIONS.

A BILL FOR AN ACT

RELATING TO GENERAL EXCISE TAX EXEMPTIONS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that Hawaii has the highest cost of living in the nation.  The general excise tax is levied on nearly every economic activity, which, due to the tax's highly regressive structure, disproportionately affects low-income and middle-class families.  This regressive nature makes it difficult for average families to afford basic life expenses, such as food and medical care.  The legislature further finds that, due to the rising cost of living, general excise tax exemptions are necessary to make living in Hawaii easier.

     Food is a major expense for Hawaii families.  Although thirty-two states and the District of Columbia exempt groceries from their sales taxes, Hawaii is among the minority that taxes food sales.  An average two-person household would save more than $400 each year if food were exempt from the general excise tax.

     Health care is another major expense for local families.  Although forty-one states exclude medical services from their sales taxes, Hawaii is among the minority of states that taxes medical and dental services.

     Finally, feminine hygiene products are an essential purchase that cost women an average of $300 per year.  Although several states that impose sales or excise taxes exempt feminine hygiene products from taxation, Hawaii does not.

     The purpose of this Act is to help alleviate the general excise tax burden on local households by exempting food, medical services, and feminine hygiene products from the general excise tax.

     SECTION 2.  Chapter 237, Hawaii Revised Statutes, is amended by adding three new sections to be appropriately designated and to read as follows:

     "§237-     Exemption of food items.  (a)  There shall be exempted from, and excluded from the measure of, the taxes imposed by this chapter all of the gross proceeds or income arising from the manufacture, production, packaging, and sale of food items within the State.

     (b)  As used in this section, "food items" means:

     (1)  Any food or food product for home consumption, except alcoholic beverages, tobacco, and food products prepared at the place of sale or at another location and sold primarily for immediate or nearly immediate consumption; provided that this exception shall not apply to the prepared food products authorized under the following paragraphs;

     (2)  In the case of those persons who are sixty years of age or over or who receive supplemental security income benefits or disability or blindness payments under title I, II, X, XIV, or XVI of the Social Security Act (42 U.S.C. 301 et seq., 401 et seq., 1201 et seq., 1351 et seq., 1381 et seq.) and their spouses, meals prepared by and served in senior citizens' centers, apartment buildings occupied primarily by these persons, public or private nonprofit establishments, eating or otherwise, that feed these persons, private establishments that contract with the appropriate agency of the State to offer meals for these persons at concessional prices, and meals prepared for and served to residents of federally subsidized housing for the elderly;

     (3)  In the case of persons sixty years of age or over and persons who are physically or mentally handicapped or otherwise so disabled that they are unable adequately to prepare all of their meals, meals prepared for and delivered to them and their spouses at their home by a public or private nonprofit organization or by a private establishment that contracts with the appropriate state agency to perform these services at concessional prices;

     (4)  In the case of disabled or blind recipients of benefits under title I, II, X, XIV, or XVI of the Social Security Act (42 U.S.C. 301 et seq., 401 et seq., 1201 et seq., 1351 et seq., 1381 et seq.), who are residents in a public or private nonprofit group living arrangement that serves no more than sixteen residents and is certified by the appropriate State agency or agencies, meals prepared and served under the arrangement;

     (5)  In the case of persons temporarily residing in public or private nonprofit shelters for victims of domestic violence, meals prepared and served by these shelters; and

     (6)  In the case of households that do not reside in permanent dwellings and households that have no fixed mailing addresses, meals prepared for and served by a public or private nonprofit establishment approved by an appropriate state or local agency that feeds these individuals and by private establishments that contract with the appropriate agency of the State to offer meals for these individuals at concessional prices.

     The phrase "food items" may be further defined by the department of taxation by rule through the enumeration of items in rules or informational releases; provided that the department of taxation shall consult with the federal Food and Nutrition Service of the United States Department of Agriculture in further defining the phrase "food items" for the purposes of the federal supplemental nutrition assistance program.

     §237-     Exemption for medical services.  (a)  There shall be exempted from, and excluded from the measure of, the taxes imposed by this chapter all of the gross proceeds arising from the sale of medical services.

     (b)  As used in this section, "medical services" means services provided by a person licensed under chapters 436E, 442, 447, 448, 448B, 451A, 451J, 451K, 452, 453, 453D, 455, 457, 457A, 457G, 458, 459, 461, 461J, 463E, 465, 465D, 466D, 466J, or 468E.

     §237-     Exemption for feminine hygiene products.  (a)  There shall be exempted from, and excluded from the measure of, the taxes imposed by this chapter all of the gross proceeds arising from the sale of feminine hygiene products.

     (b)  As used in this section, "feminine hygiene product" means a sanitary napkin, sanitary towel, tampon, panty liner, douche, feminine hygiene syringes, menstrual cup, sanitary pad, or vaginal creams, foams, ointments, jellies, powders, and sprays used for hygiene purposes."

     SECTION 3.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect on July 1, 2025.

Report Title:

General Excise Tax; Exemptions; Food; Medical Services; Feminine Hygiene Products

Description:

Establishes general excise tax exemptions for food, medical services, and feminine hygiene products.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.