THIRTIETH LEGISLATURE, 2019
STATE OF HAWAII
A BILL FOR AN ACT
relating to the general excise tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The purpose of this Act is to:
(1) Provide a general excise tax exemption for amounts received from the sale of prescription drugs sold pursuant to a prescription, diabetic supplies, prosthetic devices, medical oxygen, human blood and its derivatives, and mobility enhancement equipment sold by prescription;
(2) Repeal the exclusion of cannabis or manufactured cannabis products from the definition of "prescription drugs" for purposes of the tax exemption; and
(3) Expand the definition of "prosthetic device" to include devices that are worn on the body, such as hearing aids and pacemakers, for purposes of the tax exemption.
These changes will benefit individuals with disabilities and kupuna on limited incomes by exempting necessary medical devices from Hawaii's general excise tax.
SECTION 2. Section 237-24.3, Hawaii Revised Statutes, is amended to read as follows:
"§237-24.3 Additional amounts not taxable. (a) In addition to the amounts not taxable under section 237-24, this chapter shall not apply to:
(1) Amounts received from the loading, transportation, and unloading of agricultural commodities shipped for a producer or produce dealer on one island of this State to a person, firm, or organization on another island of this State. The terms "agricultural commodity", "producer", and "produce dealer" shall be defined in the same manner as they are defined in section 147-1; provided that agricultural commodities need not have been produced in the State;
(2) Amounts received by the manager, submanager, or board of directors of:
(A) An association of a condominium property regime established in accordance with chapter 514B or any predecessor thereto; or
(B) A nonprofit homeowners or community association incorporated in accordance with chapter 414D or any predecessor thereto and existing pursuant to covenants running with the land,
in reimbursement of sums paid for common expenses;
(3) Amounts received or accrued from:
(A) The loading or
unloading of cargo from ships, barges, vessels, or aircraft, regardless of
or not] the ships, barges, vessels, or aircraft travel between
the State and other states or countries, or between the islands of the
(B) Tugboat services, including pilotage fees, performed within the State, and the towage of ships, barges, or vessels in and out of state harbors, or from one pier to another; and
(C) The transportation of pilots or governmental officials to ships, barges, or vessels offshore; rigging gear; checking freight and similar services; standby charges; and use of moorings and running mooring lines;
(4) Amounts received
by an employee benefit plan by way of contributions, dividends, interest, and
other income; and amounts received by a nonprofit organization or office, as
payments for costs and expenses incurred for the administration of an employee
benefit plan; provided that this exemption shall not apply to any gross rental
income or gross rental proceeds received after June 30, 1994, as income from
investments in real property in this State; [
and] provided further that
gross rental income or gross rental proceeds from investments in real property
received by an employee benefit plan after June 30, 1994, under written
contracts executed prior to July 1, 1994, shall not be taxed until the
contracts are renegotiated, renewed, or extended, or until after December 31,
1998, whichever is earlier. For the
purposes of this paragraph, "employee benefit plan" means any plan as
defined in title 29 United States Code section 1002(3), as amended;
(5) Amounts received for purchases made with United States Department of Agriculture food coupons under the federal food stamp program, and amounts received for purchases made with United States Department of Agriculture food vouchers under the Special Supplemental Foods Program for Women, Infants and Children;
(6) Amounts received [
a hospital, infirmary, medical clinic, health care facility, pharmacy, or a
practitioner licensed to administer the drug to an individual for selling
prescription drugs or prosthetic devices to an individual; provided that this paragraph
shall not apply to any amounts received for services provided in selling
prescription drugs or prosthetic devices.] from sales of the following
when sold for human use:
(A) Prescription drugs sold pursuant to a prescription;
(B) Diabetic supplies;
(C) Prosthetic devices;
(D) Medical oxygen;
(E) Human blood and its derivatives;
(F) Mobility enhancing equipment sold by prescription; and
(G) Repair and replacement parts for any of the exempt devices and equipment under subparagraphs (A) through (F), as applicable;
provided that this exemption shall not apply to amounts received for services in selling any of the items under subparagraphs (A) through (G);
As used in this paragraph: "Prescription
drugs" are those drugs defined under section 328-1 and dispensed by
filling or refilling a written or oral prescription by a practitioner licensed
under law to administer the drug and sold by a licensed pharmacist under
section 328-16 or practitioners licensed to administer drugs; provided that
"prescription drugs" shall not include cannabis or manufactured
cannabis products authorized pursuant to chapters 329 and 329D; and "Prosthetic
device" means any artificial device or appliance, instrument, apparatus,
or contrivance, including their components, parts, accessories, and
replacements thereof, used to replace a missing or surgically removed part of
the human body, which is prescribed by a licensed practitioner of medicine,
osteopathy, or podiatry and that is sold by the practitioner or that is
dispensed and sold by a dealer of prosthetic devices; provided that
"prosthetic device" shall not mean any auditory, ophthalmic, dental,
or ocular device or appliance, instrument, apparatus, or contrivance;]
(7) Taxes on transient accommodations imposed by chapter 237D and passed on and collected by operators holding certificates of registration under that chapter;
(8) Amounts received as dues by an unincorporated merchants association from its membership for advertising media, promotional, and advertising costs for the promotion of the association for the benefit of its members as a whole and not for the benefit of an individual member or group of members less than the entire membership;
(9) Amounts received by a labor organization for real property leased to:
(A) A labor organization; or
(B) A trust fund established by a labor organization for the benefit of its members, families, and dependents for medical or hospital care, pensions on retirement or death of employees, apprenticeship and training, and other membership service programs.
As used in this paragraph, "labor organization" means a labor organization exempt from federal income tax under section 501(c)(5) of the Internal Revenue Code, as amended;
(10) Amounts received from foreign diplomats and consular officials who are holding cards issued or authorized by the United States Department of State granting them an exemption from state taxes; and
(11) Amounts received
as rent for the rental or leasing of aircraft or aircraft engines used by the
lessees or renters for interstate air transportation of passengers and
goods. For purposes of this paragraph,
payments made pursuant to a lease shall be considered rent regardless of
whether the lease is an operating lease or a financing lease. The definition of "interstate air
transportation" is the same as in title 49 [
States Code section 40102.
(b) As used in this section:
"Mobility enhancing equipment" means equipment, including repair and replacement parts, that:
(1) Is primarily and customarily used to provide or increase the ability to move from one place to another and is appropriate for use either at home or in a motor vehicle;
(2) Is not generally used by persons with normal mobility; and
(3) Does not include any motor vehicle or equipment on a motor vehicle normally provided by a motor vehicle manufacturer.
"Prescription" means an order, formula, or recipe issued in any form of oral, written, electronic, or other means of transmission by a duly licensed practitioner authorized by the laws of this State.
"Prescription drugs" are those drugs defined under section 328-1 and dispensed by filling or refilling a written or oral prescription by a practitioner licensed under law to administer the drug and sold by a licensed pharmacist under section 328-16 or practitioners licensed to administer drugs.
"Prosthetic device" means a replacement, corrective, or supportive device, including repair and replacement parts for the device worn on or in the body, to:
(1) Artificially replace a missing portion of the body;
(2) Prevent or correct a physical deformity or malfunction; or
(3) Support a weak or deformed portion of the body.
"Prosthetic device" shall not include any ophthalmic, dental, or ocular device or appliance, instrument, apparatus, or contrivance. Examples of prosthetic devices include heart valves, hearing aids, pacemakers, and artificial limbs."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2018.
General Excise Tax; Medical Devices; Exemption; Deaf and Blind Task Force
Exempts the sales of mobility enhancing equipment sold by prescription, prosthetic devices, prescription drugs sold pursuant to a prescription, diabetic supplies, medical oxygen, and human blood and its derivatives from the general excise tax for taxable years beginning after December 31, 2018. Amends the definitions of "prosthetic device" and "prescription drugs".
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.