Green's plan to eliminate food and medicine tax may not have a clear path

by Kim Jarrett, The Center Square, Dec 14, 2022

(The Center Square) - Hawaii Gov. Josh Green's plan to end the state's excise tax on food and medicine is not out of the realm of possibility, but it won't be easy, the executive director president of the Tax Foundation of Hawaii said. 

The governor proposed eliminating the taxes during his inaugural address, saying it would "make Hawaii affordable for those struggling to survive from paycheck to paycheck."

Lawmakers have not indicated if they back Green's plan. 

"Lawmakers and special interests for a long time have been used to a certain amount of revenue, so making do with less will be difficult," Tom Yamachika, president of the Tax Foundation of Hawaii, told The Center Square. "Spending will have to be reined in."

House Speaker Scott Saiki and Senate President Ronald D. Kouchi did not return messages to The Center Square seeking comment. The Legislature convenes for its 2023 session on Jan. 18. 

The lawmakers' silence does not mean the proposal has no hope, Yamachika said. 

"At this point, legislative leaders have not weighed in denouncing the proposals, so there is a chance of passage," Yamachika said. "The likelihood of passage will be made clearer once the session convenes and continues."

Low-income families do have some tax breaks already on the books, according to Yamachika. 

The refundable food/excise tax credit was the most used in 2020, according to a report by the Hawaii Department of Taxation. The credit is available to taxpayers who have lived in Hawaii for at least nine months and were not in jail or prison for the entire year.

Residents who made less than $50,000 annually and filed married, head of household or widower are eligible for the food tax credit. The eligibility cap for single filers is $30,000. Nearly 34%, or 29.6 million Hawaii taxpayers, used the credit in 2020, up from 28.35 million in 2022. 

Hawaii's earned income tax credit expires this year as it was not renewed by the Legislature this year. Families can claim what is equal to 20% of their federal counterparts. The tax credit was the second most popular for the 2020 tax year, with 64,430 filers claiming it. The state doled out $21.1 million, in earned income tax claims in 2020 and $18.1 million in tax year 2019, according to the report.

Other tax credits include one for low-income renters who have an adjusted gross income of less than $30,000 annually and a credit for parents who purchase a new child passenger restraint system during the tax year, according to the Hawaii Department of Taxation.