S.B. NO.



S.D. 1
















SECTION 1. The legislature finds that Hawaii taxpayers are some of the most overburdened taxpayers in the nation. This burden is most severe when consumers are taxed on critical items needed for school. Several states, including Alabama, Connecticut, Florida, Georgia, Illinois, Iowa, Louisiana, Maryland, Missouri, Mississippi, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Vermont, and Virginia, have temporary state sales tax holidays. A general excise tax holiday would allow for the citizens of this State to retain more of their money to spend in more beneficial ways. A school supply tax holiday would have the effect of stimulating retail sales and would help consumers and retailers alike.

The legislature further recognizes that the State levies a general excise tax on businesses, rather than a state sales tax on consumers. The purpose of this Act is to authorize a state general excise tax holiday for school supplies sold in the State prior to the start of the school year on the condition that businesses pass the savings on to consumers.

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

"237-   School supply tax holiday. (a) Notwithstanding any law to the contrary, taxes under this chapter shall not be due on the sale of school supplies if the sale takes place between 12:01 a.m. on the Friday two weeks prior to students' first day of public school, as designated on the department of education official school calendar, and ending at 11:59 p.m. of the Sunday immediately following that Friday; provided that all savings generated by this section shall be passed on by the seller to the purchaser without any increase in price. This exemption shall apply to the sale of school supplies only and not to sales on items that will be resold in any manner.

(b) The exemption provided in this section shall not apply to rebates, layaway sales, rain checks, or exchanges when the transactions occur before or after the tax holiday period.

(c) The exemption provided in this section shall apply to businesses operating with a general excise tax license from the department.

(d) Articles that are normally sold as a unit shall continue to be sold in that manner and shall not be priced separately and sold as individual items to obtain the exemption.

(e) Shipping and handling charges shall be included as part of the sales price of the item.

(f) The retailer shall not be required to obtain any special license, permit, or other documentation of sales during the exemption holiday period; provided that the retailer has a general excise tax license; provided further that the retailer's records shall clearly identify the type of item sold, the date the item was sold, and the sales price of the item.

(g) For purposes of this section, "school supply" means an item commonly used by a student in a course of study and includes the items set out in the following all-inclusive list: binders, book bags, textbooks, calculators, cellophane tape, blackboard chalk, compasses, composition books, crayons, erasers, expandable folders, pocket folders, plastic folders, manila folders, glue, paste, paste sticks, highlighters, index cards, index card boxes, legal pads, lunch boxes, markers, notebooks, loose leaf ruled notebook paper, copy paper, graph paper, tracing paper, manila paper, colored paper, poster board, construction paper, pencil boxes and other school supply boxes, pencil sharpeners, pencils, pens, protractors, rulers, scissors, and writing tablets. "School supply" excludes all items not listed in this definition."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2019.




Report Title:

General Excise Taxes; Tax Holiday; School Supplies



Establishes a general excise tax holiday for consumers and businesses for school supplies sold during the weekend two weeks prior to the start of the school year on condition that businesses pass the savings on to consumers. (SD1)




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