HOUSE OF REPRESENTATIVES

H.B. NO.

887

THIRTY-SECOND LEGISLATURE, 2023

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

Relating to general excise tax exemption for medical services.

 

 

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

 


SECTION 1.  The legislature finds that Hawaii has the highest cost of living in the nation.  The general excise tax is levied on nearly all economic activity, which creates a highly regressive tax system by disproportionately affecting low-income and middle-class families as a percentage of total income.  Although businesses are required to pay general excise taxes out of their gross receipts, those taxes are passed on to customers in the form of higher prices.

Health care is a major expense for local families.  Hawaii is one of only a handful of states that taxes medical and dental services.  Each physician supports an average of $2.2 million in annual economic output and 13.84 jobs.  Hawaii's tax policy burdens the ability of medical professionals to support the local community and makes their services more expensive for residents.  Forty-one states generally exclude medical services from their sales taxes.

Because the general excise tax affects almost all areas of economic activity, it can make it difficult for average families to afford basic life expenses like medical care. The purpose of this Act is to help alleviate the general excise tax burden on local households by exempting medical services.

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

     "§237-  Exemption for medical services.  (a)  There shall be exempted from, and excluded from the measure of, the taxes imposed by this chapter all of the gross proceeds arising from the sale of medical services.

 (b)  As used in this section, "medical services" means: Professional services provided by hospitals, medical clinics and facilities that are licensed by the appropriate state agencies and services are rendered under chapters 436E, 442, 447, 448, 448B, 451A, 451J, 451K, 452, 453, 453D, 455, 457, 457A, 457G, 458, 459, 461, 461J, 463E, 465, 465D, 466D, 466J, and 468E."

     SECTION 3.  In codifying the new section added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

     SECTION 6.  New statutory material is underscored.

     SECTION 7.  This act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2023.

INTRODUCED BY:

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Report Title:

General Excise Tax; Medical Services, Exemption

 

Description:

Exempts medical services from the general excise tax.

 

 

 

 

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