HILO — The state Senate passed a bill Tuesday increasing 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 tax 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.
Hawaii County introduced a one-quarter percent surcharge at the start of the year to fund transportation projects. The 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.
“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 tax is not charged for federal food assistance programs such as SNAP food stamps and the WIC program, prescription drugs and prosthetic devices. It’s estimated that tourists pick up 25 percent to 35 percent of the tax.
State Sen. Lorraine Inouye, one of the three no votes, said she opposed it since the county is seeking to add to its surcharge.
“I cannot subject my constituents and my people to pay an additional tax increase,” the Hawaii Island Democrat said following last week’s vote by the Ways and Means Committee.
Email Tom Callis at tcallis@hawaiitribune-herald.com.
