STAND. COM. REP. NO. 256-26

Honolulu, Hawaii

, 2026

RE: H.B. No. 1611

H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

Your Committee on Economic Development & Technology, to which was referred H.B. No. 1611 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose of this measure is to:

(1) Beginning January 1, 2027, establish a yearly reduction in the general excise tax rate on groceries and nonprescription drugs on a tiered schedule until January 1, 2034, when a full general excise tax exemption will begin;

(2) Beginning January 1, 2028, provide a general excise tax exemption on the wholesale sale of groceries and nonprescription drugs; and

(3) Beginning January 1, 2027, prohibit the counties from imposing a county surcharge on groceries and nonprescription drugs.

Your Committee received testimony in support of this measure from Hawaiʻi Food+Policy; Maui Chamber of Commerce; Libertarian Party of Hawaii; Hawaii Food Industry Association; Hawaii Academy of Family Physicians; Holomua Collaborative; AlohaCare; Grassroot Institute of Hawaii; Hawaiʻi Gas; aio; Title Guaranty of Hawaiʻi, ABC Stores; Hawaiʻi Food Bank; Hawaii Appleseed Center for Law & Economic Justice; The Food Basket; Chamber of Commerce Hawaii; and four individuals. Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that the cost of living in the State is among the highest in the nation and that many residents struggle to afford necessities, including food and medication. Your Committee further finds that nearly all states exempt or impose a reduced tax on necessities like food and prescription drugs. Hawaii is one of only ten states in the nation that fully tax groceries and non-prescription drugs. Applying the general excise tax to groceries meaningfully increases the cost of basic necessities for Hawaii families. This measure seeks to alleviate this financial burden by phasing out essential groceries and nonprescription drugs from the tax base, which will directly reduce household food costs, particularly for low- and moderate-income residents, while reducing the tax burden on necessities more fairly.

Your Committee has amended this measure by:

(1) Changing the effective date to July 1, 3000, to encourage further discussion; and

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

As affirmed by the record of votes of the members of your Committee on Economic Development & Technology that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1611, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1611, H.D. 1, and be referred to your Committee on Judiciary & Hawaiian Affairs.

Respectfully submitted on behalf of the members of the Committee on Economic Development & Technology,

____________________________

GREGGOR ILAGAN, Chair