The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Senate Committee on Ways and Means on Feb. 27, 2025.
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Feb. 27, 2025, 10:30 a.m.
Hawaii State Capitol
Conference Room 211 and Videoconference
To: Senate Committee on Ways and Means
Sen. Donovan Dela Cruz, Chair
Sen. Sharon Moriwaki, Vice Chair
From: Grassroot Institute of Hawaii
Ted Kefalas, Director of Strategic Campaigns
RE: SB1043 SD1 — RELATING TO TAXATION
Aloha Chair Dela Cruz, Vice-Chair Moriwaki and other members of the Committee,
The Grassroot Institute of Hawaii supports SB1043 SD1, which would exempt from the general excise tax groceries and over-the-counter medications.
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 exempting groceries would go a long way toward making Hawaii more affordable for 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. In Georgia, for example, the 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, SD1043 SD1 limits the proposed exemption to only groceries eligible for purchase under the federal Supplemental Nutrition Assistance Program. The bill would retain the excise tax on restaurants, and thus a significant amount of visitor food spending.
In 2022, the Hawaii Department of Taxation director estimated that exempting groceries from the general excise tax could save taxpayers $268 million,[4] giving everyone relief from Hawaii’s cost of living.
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.[5]
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.
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, September 2021, p. 7.
[2] Jianqiang Zhao, “Putting Grocery Food Taxes on the Table: Evidence for Food Security Policy-Makers,” Master’s thesis, Cornell University, August 2020, p. iii.
[3] “Tax Incentive Evaluation: Grocery Sales Tax Exemption,” Georgia Department of Audits and Accounts, Dec. 13, 2022.
[4] Isaac Choy, “Column: GET not as regressive as some believe,” Honolulu Star-Advertiser, July 24, 2022.
[5] “Hawaii General Excise & Use Tax Exemptions: Tax Year 2021,” Hawaii Department of Taxation, Nov. 2022, p. 6.
