STAND. COM. REP. NO. 780

Honolulu, Hawaii

RE: S.B. No. 361

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2021

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 361, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO GENERAL EXCISE TAX,"

begs leave to report as follows:

The purpose and intent of this measure is to establish a general excise tax exemption for the gross proceeds or income arising from the sale of Supplemental Nutrition Assistance Program eligible items.

Your Committee received written comments in support of this measure from the Hawaii Farm Bureau; Hawaii Food Industry Association; Hawaii Iron Workers Stabilization Fund; IATSE, Local 665; International Longshore and Warehouse Union, Local 142; Maui Chamber of Commerce; United Food and Commercial Workers, Local 480; and Waikiki Neighborhood Board.

Your Committee received written comments in opposition to this measure from the Hawaii Government Employees Association.

Your Committee received comments on this measure from the Department of Taxation and the Tax Foundation of Hawaii.

Your Committee finds that Hawaii has the highest cost of living in the nation. Your Committee also finds that the coronavirus disease 2019 (COVID-19) pandemic has made it harder for many residents to afford necessities such as groceries. Your Committee further finds that Hawaii is one of the few states that fully taxes the sale of groceries. Your Committee believes that exempting groceries from the general excise tax will help many families that have been impacted negatively by the COVID-19 pandemic.

Your Committee has amended this measure by:

(1) Clarifying that the general excise tax exemption applies to the sale of eligible groceries under the Supplemental Nutrition Assistance Program;

(2) Clarifying that soft drinks are not included in the definition of "food" or "food product";

(3) Changing the effective date to July 1, 2050, to facilitate further discussion on the measure; and

(4) Making technical nonsubstantive amendments for purposes of clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 361, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 361, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

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DONOVAN M. DELA CRUZ, Chair