Petition Aims To Exempt Medical Costs From Hawaii’s General Excise Tax

by Mark Coleman

The Grassroot Institute of Hawaii has launched a petition urging the Hawaii Legislature to exempt medical services from the state’s general excise tax. The purpose is to make healthcare more affordable and help alleviate Hawaii’s doctor shortage.

“Hawaii families have been struggling with the rising costs of goods for years, and healthcare is no different,” said Keli‘i Akina, Institute president and CEO. “We have an ongoing doctor shortage, overstressed hospitals and delays in access to care. A GET exemption would cut costs for consumers and make Hawaii a more attractive place for doctors to practice.”

Physicians themselves have cited Hawaii’s tax on medical services as a contributing factor in their decisions to leave the state. Hawaii is one of only four states that taxes medical services, and doctors are unable to pass on the tax to Medicare patients, who make up about 18% of residents who have health insurance.

A GET exemption has broad support among current and prospective future state lawmakers. Candidates ranging from Democratic Lt. Gov. Josh Green to long-time Republican state representative Gene Ward have expressed support. In addition, a bipartisan group of state senators introduced a bill in 2021 that would’ve exempted medical services from the GET, along with food and hygiene products.

According to a survey conducted last year by Anthology Research, 79% of residents agreed that lower taxes would help residents afford the state’s high cost of living, and 73% agreed that residents and businesses are overtaxed.

Akina said other factors contributing to Hawaii’s unaffordability and healthcare shortages include the state’s medical certificate-of-need laws, occupational licensing laws and “scope of practice” limits on nurses and pharmacists.

“But exempting medical services from the GET,” he said, “would be a major first step toward providing long overdue and much-needed relief.”

The petition to exempt medical services from the state GET will be available for signatures until January, when it will be submitted to members of the 2023 Legislature for consideration.

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