THE SENATE	S.B. NO.	1576
THIRTY-SECOND LEGISLATURE, 2023
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. Chapter 237, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§237-   Groceries; reduced rate; exemption. (a) Notwithstanding any other provision of law to the contrary, there is hereby levied and shall be assessed and collected, a tax equivalent to:

(1) In calendar year 2024, three per cent;

(2) In calendar year 2025, two per cent; and

(3) In calendar year 2026, one per cent,

of the gross proceeds from the retail sale of groceries within the State; provided that the tax rates for the applicable tax years shall be in lieu of the tax imposed by section 237-13 on the retail sale of groceries.

(b) Beginning January 1, 2027, there shall be exempted from, and excluded from the measure of, the taxes imposed by this chapter all of the gross proceeds or gross income received from the retail sale of groceries within the State.

(c) 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 human consumption 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.

§237-   Nonprescription drugs; reduced rate; exemption. (a) Notwithstanding any other provision of law to the contrary, there is hereby levied and shall be assessed and collected, a tax equivalent to:

(1) In calendar year 2024, three per cent;

(2) In calendar year 2025, two per cent; and

(3) In calendar year 2026, one per cent,

of the gross proceeds from the retail sale of nonprescription drugs within the State; provided that the tax rates for the applicable tax years shall be in lieu of the tax imposed by section 237-13 on the retail sale of nonprescription drugs.

(b) Beginning January 1, 2027, there shall be exempted from, and excluded from the measure of, the taxes imposed by this chapter all of the gross proceeds or gross income received from the sale of nonprescription drugs within the State.

(c) 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 paragraphs (1) through (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 2. New statutory material is underscored.

SECTION 3. This Act shall take effect on January 1, 2024.

INTRODUCED BY:

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Report Title:

General Excise Tax; Rate Reduction; Exemption; Groceries; Nonprescription Drugs

Description:

Gradually reduces the general excise tax rate imposed on the retail sale of groceries and nonprescription medication over a period of four years until eliminated in calendar year 2027. Preserves the county surcharge on tax and the general excise tax on wholesales of groceries and nonprescription medication. Effective 1/1/2024.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.