HONOLULU — The state Senate passed a bill Tuesday that would increase the general excise tax to help fund education.
Revenue from the half-percent surcharge would go to the state Department of Education and University of Hawaii.
The legislation, Senate Bill 1474, needs to pass the House and be signed by Gov. David Ige to become law.
The GET rate, not including a county surcharge, is 4 percent for the sale of retail goods and services, renting or leasing property, construction contracting and most commissions. A 0.5 percent tax is levied on wholesale goods.
Kauai County’s half-percent increase on the GET took effect Jan. 1 to fund public transportation improvements. If this latest proposed hike passes, it would increase the GET on Kauai to 5 percent.
Hawaii County introduced a one-quarter-percent surcharge at the start of the year to fund transportation projects. The Big Island County Council is expected to adopt a bill increasing its surcharge to the full half-percent as allowed by law.
If the county and state GET bills pass, the tax on Hawaii Island would be 5 percent on the retail level, up from 4.25 percent. The Legislature could delay implementation.
The state surcharge would increase GET revenue by about $438 million, according to the state Department of Budget and Finance.
Individuals and organizations testifying in support before the Senate Ways and Means Committee last week said the surcharge will address issues in state schools, including classroom sizes and teacher turnover.
David Negaard, a teacher on Maui, said schools lack basic supplies and are faced with dilapidated facilities.
“I am tired of being asked to do ever more with less, with the well-being of Hawaii children in the balance,” he wrote to lawmakers.
Opponents note it will make the state more expensive to live and do business in.
“There are no exemptions in this measure for things like food, essential items,” commented the Hawaii Food Industry Association.
“Hawaii already has the highest cost of living in the U.S. and one of the highest tax burdens in the U.S.,” the HFIA said in a written submitted statement.
The tax is not charged for federal food-assistance programs such as SNAP (Supplemental Nutrition Assistance Program, food stamps) and the WIC (Women, Infants and Children) program, prescription drugs and prosthetic devices.
Source: The Garden Island