Hawaii lawmakers kill excise food tax exemption, but other proposed relief lives on

HONOLULU (HawaiiNewsNow) -The proposal to end Hawaii’s 4.5% excise tax on food and medicine has died at the state Legislature, but there is still millions of dollars in income tax relief still on the table as the 2023 session nears its midpoint.

Even though the excise tax exemption for food and medicine and medical services was a big part of Gov. Josh Green’s campaign, when lawmakers pushed back, he publicly agreed that instead of that broad a tax break, the focus should be on tax relief for lower income and working class folks.

The excise tax exemption was killed without being heard in either House or Senate money committees. Without those hearings, the bill can’t get votes in either house this week.

But with a nearly $3 billion surplus, there are still multiple tax relief bills still on the table — all involving the state’s complicated income tax system.

So even though lower income folks will be getting help, they may need help in filling out their tax forms to get it.

Sergio Alcubilla runs the Hawaii Workers Center at the Towers at Kuhio park housing complex. He recently got a family help with their income taxes and it paid off.

“When they got a refund for over $10,000 can you imagine how much joy you would get knowing you are getting $10,000 back?” Alcubilla said.

Alcubilla explained that lower income and migrant families often end up having too much withheld from paychecks and must navigate the state’s complicated income tax system to get full refunds.

“That’s money that they leave on the table every single year,” he said.

Although those families would have benefited from simply repealing the tax on food and medicine, now that that has died, lawmakers have kept alive proposals for more generous tax credits, higher standard and personal deductions and tax brackets shifted up the income ladder.

Tom Yamachika, of the Tax Foundation of Hawaii, said he was surprised to see those benefits would also be tied in the future to changes to the cost of living.

“Which is something that we’ve almost never seen before. I mean, it’s been proposed before, but it’s just never seen the light of day,” Yamachika said.

At the workers center Alcubilla said it will be up to the taxpayers to claim what they are entitled to. “That’s the big thing for us to really organize the community to let them know that there are resources out there,” he said.

They are encouraging working families to seek Volunteer Income Tax Assistance — VITA. The sites are listed online.

That’s a good idea already — and even more important next year, when the proposed tax changes would take effect.

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