The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the House Committee on Human Services and Homelessness on Jan. 30, 2025.
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Jan. 30, 2025, 9:35 a.m.
Hawaii State Capitol
Conference Room 325 and Videoconference
To: House Committee on Human Services and Homelessness
Rep. Lisa Marten, Chair
Rep. Ikaika Olds, Vice Chair
From: Grassroot Institute of Hawaii
Ted Kefalas, Director of Strategic Campaigns
RE: HB933 — RELATING TO GENERAL EXCISE TAX REDUCTIONS
Aloha Chair Marten, Vice-Chair Olds and other members of the Committee,
The Grassroot Institute of Hawaii supports HB933, which would lower the general excise tax by one-half of a percent for groceries eligible for purchase under the federal Supplemental Nutrition Assistance and Special Supplemental Nutrition programs for Women, Infants and Children programs and over-the-counter nonprescription medications.
The bill would also direct the Hawaii Department of Business, Economic Development and Tourism to conduct a cost-benefit analysis of the lower rate prior to the 2027 legislative session.
This is a good bill, one that would make an immediate difference when it comes to addressing Hawaii’s high cost of living. Research shows that taxes on groceries contribute to less spending on meals at home[1] and higher food insecurity,[2] so lowering the tax for eligible groceries and nonprescription medications under these two federal programs, SNAP and WIC, would go a long way toward making Hawaii more affordable for these struggling Hawaii residents.
In addition, the state’s 4% general excise tax is regressive, hitting low and middle-income individuals and families the hardest, so again, an exemption affecting many of these families would help them keep food on their tables.
This bill would also have broader benefits. The Georgia state auditor recently estimated that Georgia’s sales tax exemption for groceries created more than 5,000 jobs and an additional $807 million in economic output.[3]
For anyone concerned that tourists might be the primary beneficiaries of changes to the GET, HB933 limits the proposed exemption to only SNAP- and WIC-eligible groceries. The bill would retain the excise tax on restaurants and thus a significant amount of visitor food spending.
Regarding nonprescription medications and medical equipment and supplies, a GET exemption for these products would simply be in keeping with the logic behind the state’s existing exemption for prescription drugs and prosthetics.[4]
If this bill is enacted, nonprescription medicines such as Tylenol and Advil would suddenly cost less, making it easier for many individuals suffering from everyday health conditions to find relief and save money.
In 2022, the Hawaii Department of Taxation director estimated that exempting groceries from the general excise tax could save taxpayers $268 million.[5] It is unclear how much this bill would save consumers, but it would nonetheless generate an appreciable amount of relief from Hawaii’s cost of living.
Thank you for the opportunity to testify.
Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
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[1] Diansheng Dong and Hayden Stewart, “Food Taxes and Their Impacts on Food Spending,” U.S. Department of Agriculture, Economic Research Service, Sept. 2021, p. 7.
[2] Jianqiang Zhao, “Putting Grocery Food Taxes on the Table: Evidence for Food Security Policy-Makers,” Master’s Thesis, Cornell University, Aug. 2020, p. iii.
[3] “Tax Incentive Evaluation: Grocery Sales Tax Exemption,” Georgia Department of Audits and Accounts, Dec. 13, 2022.
[4] “Hawaii General Excise & Use Tax Exemptions: Tax Year 2021,” Hawaii Department of Taxation, Nov. 2022, p. 6.
[5] Isaac Choy, “Column: GET not as regressive as some believe,” Honolulu Star-Advertiser, July 24, 2022.
