Committee passes amended bill to exempt groceries and cap fiscal impact at $10 million

The House Committee on Economic Development on March 14 recommended passage of SB 1043 with amendments that would exempt groceries and half of the General Excise Tax (GET) for over-the-counter medicine and cap the bill’s fiscal impact at $10 million.

Supporters including Cody Sula (Ironworkers Stabilization Fund), the Hawaii Food Industry Association and Dwayne Bautista argued the measure would lower the cost of living for households and reduce food insecurity. The Hawaii Food Industry Association told the committee that removing the tax on groceries could save the average family about $700–$800 annually and cited external audits showing that similar reforms increased economic activity in other states.

The chair told the committee that full removal of the grocery tax would have larger budgetary impacts (citing Council on Revenues projections of $140–$200 million in subsequent years) and said the committee opted for a smaller, fiscally constrained step. Committee language directs the amendment capping the fiscal impact at $10 million and retains intent to lower the cost of living while avoiding large immediate revenue losses to the state budget.

The committee recommended passage with these amendments; the recommendation was adopted in committee. No implementing mechanics or specific offsets were specified in the hearing transcript; the chair noted prior legislative changes (e.g., raising standard deduction) and suggested other revenue and permitting reforms have been discussed as possible offsets but did not adopt a GET increase at this time.