Gubernatorial candidates promise aid from state’s basic excise tax on meals, drugs

HONOLULU (HawaiiNewsNow) – This year’s race for governor could lead to one of the biggest consumer tax cuts in recent Hawaii history.

As people continue to feel the pinch of rising prices, candidates are promising relief from the state’s general excise tax.

All three major candidates in the Democratic race for governor — businesswoman Vicky Cayetano, Lt. Gov. Josh Green and U.S. Rep. Kai Kahele — support lifting the excise tax on food and medicine.

Hawaii Appleseed Center for Law and Economic Justice supports GET relief.

Hawaii Budget and Policy Center Director Will White said they’re supportive of progressive tax policy but views the GET as a regressive tax because it disproportionately impacts lower-income families.

“Folks who are of the lowest income are paying a higher percentage of their monthly income on that tax relative to higher income earners,” White said.

Former Tax Director Kurt Kawafuchi explained businesses can pass the GET to customers.

“If you take a store like Ross, and you go and buy something for $100, Ross is not only charging you the general excise tax on the $100, but it also is paying the 4.5% on many transactions to operate,” he said. “For example, when it pays rent to the landlord, generally that’s going to include the 4.5% general excise tax.”

Kawafuchi said there’s already a GET exemption for prescription drugs.

Appleseed Hawaii said a tax revenue boost must be paired with the tax cut to ensure key services aren’t cut.

“Because the last thing you want to have happen is provide direct relief for low-income folks but then in the state budget, have to slash services for folks who need those essential services the most,” White said.

The organization suggested raising the capital gains tax or increasing tax on the wealthiest earners.