Requiem for GET exemptions

As Shakespeare might have put it: “Friends, neighbors, taxpayers, lend me your ears. I have come to bury the Hawaii Legislature, not to praise it. The bad laws our legislators enact live after them, while the good are oft interred in committees.”

That is certainly what happened to the many good proposals to exempt basic necessities such as groceries and doctor visits from the state general excise tax. The measures were among the most promising reforms introduced in the 2023 legislative session. Yet, they all died while many bad bills moved forward.

It was an opportunity for the Legislature to pass transformative legislation that would help bring down the cost of living and counter Hawaii’s critical, sometimes heartbreaking shortage of doctors. The GET proposals were simple and clear — and they even had the support of the governor.

Which made their demise even more frustrating to witness.

Several bills, including HB1050 and SB1348, focused on groceries and over-the-counter medicines, including feminine hygiene products. Eliminating the GET on groceries was a popular part of Gov. Josh Green’s election campaign, as it represented an easy way to lower the cost of living for so many Hawaii families

A tax cut for groceries would have made a difference for Hawaii residents at every level, not just one economic segment. It also would have helped people immediately, not next year when filing their income taxes.

As for the failed proposals that exempt medical services from the GET, a recent report from the Grassroot Institute of Hawaii showed that adopting such a policy wouldn’t just help make healthcare more affordable, it would also make the state more attractive to doctors.

Hawaii is one of only two states to tax medical services and the only state to tax services rendered through Medicare, Medicaid and TRICARE. Local doctors have testified that the GET on medical services makes it difficult for private practices to survive in Hawaii, thereby contributing to the state’s doctor shortage.

But even with strong support from the medical community, none of the bills that addressed the GET on medical services made it through both chambers of the Legislature. Those include SB102HB240SB1128HB662, and SB1035.

And it’s not like any of these GET proposals were radical or even unusual. In fact, most Americans don’t have to pay a sales tax on their groceries or medical services.

Moreover, Hawaii could easily afford these tax cuts, considering that the state is projected to have billions of dollars in surplus over the next few years.

It’s even possible that some, if not all, of the revenues lost due to the grocery and medical services exemptions would be offset by revenues generated from increased economic activity resulting from the tax cuts.

Nevertheless, during this past legislative session we heard all the excuses for the demise of the GET exemption bills — budget concerns, we might be heading into a recession, not enough data about the cost of the tax cut, more pressing issues to be addressed, etc., etc.

But that’s all they were … excuses. There is a strong case to be made for these exemptions, and they deserved a full and thoughtful hearing.

In fairness, there were several legislators who tried very hard to get these tax cuts passed, who clearly understood how important they are to Hawaii residents. To them, I say: “Thank you.”

Looking ahead, I’m hopeful more legislators will be on board with these proposals next year, with even more public support to drive them forward.

If you would like to learn more about what transpired during the latest legislative session, please attend one of our “legislative wrap-up” events this coming week.

Our policy and advocacy teams will be sharing their frontline insights at luncheons on MauiHawaii Island and Oahu — on Tuesday, Wednesday and Thursday, respectively — and we’d love to see you there.

This commentary was Keli‘i Akina’s weekly “President’s Corner” column for May 6, 2023. If you would like to have his columns emailed to you on a regular basis, please call 808-864-1776 or email info@grassrootinstitute.org.

Subscribe to our free newsletter!

Get updates on what we're doing to make Hawaii affordable for everyone.
Want more?

Get content like this delivered straight to your inbox. We’ll also send updates on what we’re doing to make Hawaii affordable for everyone.

Recent Posts