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Retail delivery fee bill draws sharp industry opposition; advocates say funds would aid Safe Routes to School
Summary
SB 1124 would impose a 50¢ fee on non-food retail deliveries to fund safe routes projects; consumer advocates and safety groups backed the bill, while industry and retailers warned it is regressive and burdensome on small businesses and delivery-dependent residents.
Senate Bill 1124 — a proposal to impose a 50¢ retail delivery fee on non-food deliveries with proceeds deposited into the Safe Routes to School special fund — generated extensive testimony Feb. 4 before the Senate Committee on Transportation and Culture and the Arts.
Supporters including the Hawaii Appleseed Center for Law and Economic Justice said the small fee could fund pedestrian and bicycle projects within one mile of schools and help reverse an uptick in vulnerable road-user fatalities. "These funds generated by this tax will not only be transformational for children getting to and from school," testimony said.
Opponents — including the Chamber of Progress, Retail Merchants of Hawaii and other retail and tech-industry groups — said the fee would be regressive, increase costs for small local businesses and harm residents who rely on delivery services, including seniors and people with disabilities. The Tax Foundation warned that creating a new tax type imposes administrative costs on the Department of Taxation and may have a regressive impact because it is imposed without regard to transaction value.
Department of Taxation staff identified a technical drafting issue related to whether the fee should be excluded from the "gross proceeds" or "sales price" for general excise tax (GET) purposes and asked the committee to amend the bill’s definition to match GET terminology.
The committee deferred SB 1124 to Feb. 6 at 3:01 p.m. in Room 224 to allow additional stakeholder discussions and technical corrections.
What the bill would do: impose a 50¢ per-transaction fee on retail deliveries of non-food items, allow retailers to pass the fee to purchasers, create exemptions and deposit revenue into the Safe Routes to School special fund (as described by proponents).
Next steps: Committee staff will prepare revised language addressing Tax Department technical comments and stakeholder concerns; the bill will return to the committee on Feb. 6 for further consideration.
