Civil Beat Topics

Hawaii General Excise And Use Tax

The General Excise Tax (GET) is levied against a business’s gross receipts for the privilege of doing business in Hawaii. The majority of business activities are subject to a 4 percent tax. Wholesale transactions are subject to a 0.5 percent tax and insurance commissions are charged a 0.15 percent tax. Unlike a sales tax, the GET is levied on the seller and not the purchaser.

Unlike most other states, Hawaii does not have a sales tax. But the GET is sometimes mistakenly called a sales tax because businesses are allowed to pass those taxes on to their customers. Collecting the GET rate from customers creates more taxable income for companies — a factor companies take into account when charging for goods and services. As a result, the customer pays the GET rate plus a little extra, essentially GET on the additional revenue the GET brings in.

All transactions on Oahu are taxed an extra 0.5 percent to help pay for the planned Honolulu Rail Project.

The use tax is the general excise tax’s complement and is applied to imported goods used in Hawaii. It is collected when the product enters the state. The use tax is 0.5 percent when the import is sold for retail, leased or rented, or used to manufacture or construct another product. For all other imports, the tax is 4 percent.

Together, the general excise and use taxes make up a crucial source of revenue for Hawaii. Typically, they generate roughly half of the state’s tax income – about $2.8 billion in fiscal 2014. (Individual and corporate income taxes, tobacco and liquor taxes and the Transient Accommodations Tax also help fill the state’s general fund.)

As a broad-based tax, the GET adds extra costs to the manufacturing of products at every step of the way, from the material supplier to the manufacturer to the wholesaler to the retailer. The GET is regarded as part of the Price of Paradise because of its cumulative effect on the price of goods and services. It increases the price tag of both living and doing business in Hawaii.

Because the GET makes up such a large portion of the state’s general fund, lawmakers have periodically looked at raising the tax rate to generate extra income. The proposal is often met with resistance because of the regressive nature of the tax.

History

The GET is an artifact of the 1930s when Hawaii was still a U.S. territory. At that time, Hawaii didn’t have flourishing retail or tourism industries on which it could levy sales taxes. Instead, its economy was based on sugar cane and pineapple, which were exported. Lawmakers used the GET as a way to collect taxes on those exported goods.

Controversy

The majority of the state’s pineapple and sugar cane producers have shuttered. Today, the state relies almost exclusively on tourism and government spending to support its economy. Some see the GET as a barrier to doing business in Hawaii, arguing that the GET’s extra charge prevents new industries from making meaningful economic contributions and discourages consumer spending. The tax has also been criticized because it applies to the sale of basic necessities such as food and medical services — items that are exempt from sales tax in most states.

Senate Kills Last Bill That Would’ve Reformed Judiciary Renewal Process Cory Lum/Civil Beat

Senate Kills Last Bill That Would’ve Reformed Judiciary Renewal Process

After encountering overwhelming criticism, all three of Sen. Gilbert Keith-Agaran’s bills to change the way judges are chosen and retained have died.

Raising The GET: Will Hawaii Lawmakers Take A Bite Of The Forbidden Fruit? Cory Lum/Civil Beat

Raising The GET: Will Hawaii Lawmakers Take A Bite Of The Forbidden Fruit?

UPDATED: Bills increasing the general excise tax to support long-term caregiving and education reform cleared key votes Wednesday.

Is Hawaiian Electric Deal Good for Consumers? Cory Lum / Civil Beat

Is Hawaiian Electric Deal Good for Consumers?

Consumer advocate plans to bring in reinforcements to review the proposed $4.3 billion sale of Hawaiian Electric Industries. PUC must decide who will be allowed to intervene in the yearlong process.

Living Hawaii: Could Removing State Taxes on Food Make it Cheaper?

Living Hawaii: Could Removing State Taxes on Food Make it Cheaper?

Because Hawaii has a general excise tax not a sales tax, it's hard to tell.
Tax Review Commission: Don’t Kill the Messenger

Tax Review Commission: Don’t Kill the Messenger

Panel says tax hike proposal comes from independent reports; besides, it's ultimately the Hawaii Legislature's call.

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The growth of e-commerce has lawmakers envisioning a huge loss of sales tax revenues.
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Non-Hawaii Owners of Vacation Rentals in Uproar

Bills before Legislature would require island control over privately owned Hawaii properties.
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Hawaii Lawmakers Again Aiming to Tax E-Commerce Sales

Hawaii losing out on estimated $25 million in e-commerce revenue annually.
Number of Hawaii Tax Audits Falls to 7-Year Low Civil Beat

Number of Hawaii Tax Audits Falls to 7-Year Low

Auditors manually select cases from among 2.5 million returns processed each year.
Honolulu Property Tax Overhaul Dead On Arrival? Fotali

Honolulu Property Tax Overhaul Dead On Arrival?

Current rules give millionaires, fixed-income seniors same breaks.
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Hawaii Sees ‘Optimistic Financial Picture’ Ahead

Deputy budget chief cites tax revenue growth, proceeds from billion-dollar bond sale.
Rail Price Drops Again In New Draft Financial Plan

Rail Price Drops Again In New Draft Financial Plan

UPDATED Latest projection cuts construction costs by $143 million, to $5.17 billion.
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Analysis: Hawaii Tax Review Commission Has Some Teeth

Thirty-one laws have been passed in response to panel's recommendations since 1983.
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Hawaii Tax Review Panel to Ask for More Time

Delay would put report for Legislature on tax policy two years behind schedule.
Recent Rail Tax Revenues a Pleasant Surprise for City

Recent Rail Tax Revenues a Pleasant Surprise for City

Honolulu collected $15 million more than projected over last six months.

March 2016

Thursday, March 10

Senate Kills Last Bill That Would’ve Reformed Judiciary Renewal Process

February 2016

Wednesday, February 10

Raising The GET: Will Hawaii Lawmakers Take A Bite Of The Forbidden Fruit?

December 2014

Monday, December 8

Is Hawaiian Electric Deal Good for Consumers?

January 2014

Monday, January 27

Living Hawaii: Could Removing State Taxes on Food Make it Cheaper?

September 2012

Tuesday, September 11

Tax Review Commission: Don’t Kill the Messenger

March 2012

Saturday, March 3

Yearning For a Way to Collect Tax On Out-of-State Vendors

February 2012

Tuesday, February 28

Non-Hawaii Owners of Vacation Rentals in Uproar

Thursday, February 23

Hawaii Lawmakers Again Aiming to Tax E-Commerce Sales

December 2011

Wednesday, December 21

Number of Hawaii Tax Audits Falls to 7-Year Low

Monday, December 19

Honolulu Property Tax Overhaul Dead On Arrival?

Wednesday, December 14

Hawaii Sees ‘Optimistic Financial Picture’ Ahead

October 2011

Friday, October 7

Rail Price Drops Again In New Draft Financial Plan

September 2011

Saturday, September 24

Analysis: Hawaii Tax Review Commission Has Some Teeth

Friday, September 9

Hawaii Tax Review Panel to Ask for More Time

July 2011

Friday, July 22

Recent Rail Tax Revenues a Pleasant Surprise for City

Thursday, July 14

Hawaii 2011 Tax Revenues Higher Than Expected

June 2011

Friday, June 17

Attorneys, CPAs and Bank Execs Named to Hawaii Tax Review Commission

Tuesday, June 14

Hawaii Tax Collections Could Best Forecast

April 2011

Tuesday, April 19

Berg: Hawaii Profiteering Off Honolulu Taxpayers

Thursday, April 7

GET Hike In Hawaii Is Dead

Tuesday, April 5

Capitol Watch: April 6

March 2011

Thursday, March 24

Online Travel Companies Owe Hawaii $170 Million In Unpaid Taxes

February 2011

Friday, February 25

Let’s Address Root Causes of Hawaii’s Financial Woes

Thursday, February 17

Road Paved for Raising the GET?

December 2010

Thursday, December 30

Delaying Hawaii’s Tax Refunds Seen as a One-Time Deal

Wednesday, December 8

Civil Beat Analysis: City’s Rail Tax Plan Optimistic

November 2010

Tuesday, November 16

Hawaii’s General Fund Down 6% So Far This Fiscal Year

Saturday, November 6

Hawaii Taxes

September 2010

Tuesday, September 28

Hawaii Vehicle Registration Fees Favor the Rich

July 2010

Wednesday, July 21

Delinquent Notices Sent to Taxpayers In Error

Friday, July 2

Tax Department Employee Claims Retaliation

May 2010

Saturday, May 15

Warning: The Real Cost Of The General Excise Tax

Tuesday, May 11

Why Growing A Business In Hawaii Is Challenging

Friday, May 7

Do charities cross the line to help donors?

Thursday, May 6

Nonprofits GET taken by state

Saturday, May 1

Nonprofits Can’t Escape GET, Despite “Tax-Exempt” Status

April 2010

Wednesday, April 21

The real cost of the General Excise Tax

Hawaii General Excise And Use Tax