THE SENATE

S.B. NO.

608

THIRTY-FIRST LEGISLATURE, 2021

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to general excise tax exemptions.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


SECTION 1. The legislature finds that the cost of living in Hawaii is extremely high and too many residents are struggling to pay for housing, food, and medication. According to data from the Missouri Economic Research and Information Center, Hawaii had the highest cost of living in 2019. Coupled with the high cost of living, the coronavirus disease 2019 (COVID-19) pandemic has further exacerbated the problem of residents being unable to afford necessities like groceries. The legislature further finds that thirty-two states, plus the District of Columbia, currently exempt most foods purchased for consumption at home from the state sales tax. Grocery sales tax is often considered regressive and disproportionately hurts working families and may affect the quality, diversity, and even the amount of food they can afford to put on the table, especially during a pandemic.

The legislature also finds that the COVID-19 pandemic has led to over two hundred fifty thousand workers in Hawaii losing their jobs, leaving all those families to suffer financially. Exempting groceries and nonprescription drugs from the general excise tax will help many families that have been impacted negatively by the COVID-19 pandemic and allow them to put food on the table and maintain the health of their families. In addition, workers and their families who may save money on groceries and nonprescription drugs purchases will be able to spend that money elsewhere in the economy, thus allowing the money to continue to circulate, which will help many businesses and continue to generate revenue for the State.

Accordingly, the purpose of this Act is to:

(1) Establish a general excise tax exemption for the gross proceeds or income from the sale of groceries that are eligible under the Supplemental Nutrition Assistance Program or Special Supplemental Nutrition Program for Women, Infants, and Children; and

(2) Establish a general excise tax exemption for the gross proceeds or income from the sale of nonprescription drugs.

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

"237-   Exemption for eligible groceries. (a) There shall be exempted from, and excluded from the measure of, the taxes imposed by this chapter all of the gross proceeds or income received from the sale of all groceries eligible for purchase under the Supplemental Nutrition Assistance Program and Special Supplemental Nutrition Program for Women, Infants, and Children within the State, regardless of the means of purchase and the eligibility of the purchaser for Supplemental Nutrition Assistance Program or Special Supplemental Nutrition Program for Women, Infants, and Children benefits.

(b) For the purposes of this section:

"Food" or "food product" means substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value.

"Groceries" means any food or food product for home consumption. "Groceries" may be further defined by the department by rule through the enumeration of items in rules or tax informational release; provided that the department shall consult with the federal Food and Nutrition Service of the United States Department of Agriculture in further defining the term "groceries" for purposes of the Supplemental Nutrition Assistance Program and Special Supplemental Nutrition Program for Women, Infants, and Children.

237-   Exemption for nonprescription drugs. (a) There shall be exempted from, and excluded from the measure of, the taxes imposed by this chapter all of the gross proceeds or income received from the sale of nonprescription drugs.

(b) For the purposes of this section:

"Drug" means:

(1) Articles recognized in the official United States Pharmacopoeia, official United States Pharmacopoeia Dispensing Information, official Homeopathic Pharmacopoeia of the United States, or official National Formulary, or any supplement to any of these publications;

(2) Articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in humans or animals;

(3) Articles, other than food or clothing, intended to affect the structure or any function of the body of humans or animals; or

(4) Articles intended for use as a component of any article specified in paragraph (1), (2), or (3); provided that the term "drug" does not include devices or their components, parts or accessories, cosmetics, or liquor as defined in section 281-1.

"Nonprescription drug" means any packaged, bottled, or nonbulk chemical, drug, or medicine that may be lawfully sold without a practitioner's order."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on January 1, 2022.

 

INTRODUCED BY:

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Report Title:

General Excise Tax; Certain Groceries; Nonprescription Drugs; Exemption

 

Description:

Establishes a general excise tax exemption for the gross proceeds or income from the sale of groceries that are eligible under the Supplemental Nutrition Assistance Program or Special Supplemental Nutrition Program for Women, Infants, and Children, regardless of the means of purchase and the program eligibility of the purchaser. Establishes a general excise tax exemption for the gross proceeds or income from the sale of nonprescription drugs.

 

 

 

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