Lawmakers eye tax relief proposals as residents grapple with rising costs for medical care, groceries
HONOLULU (HawaiiNewsNow) - Hawaii lawmakers began giving preliminary approval to major tax breaks Friday, including repealing the excise tax on groceries and on doctors who serve low-income and elderly patients in small clinics.
Those examples are seen as ways that the excise tax system is regressive and at times harmful to vulnerable residents.
The state Senate Human Services Committee approved Senate Bill 1035, an excise tax exemption for doctors serving Medicaid, Medicare and Tricare beneficiaries.
It also heard from doctors who said that while hospitals and large clinics are already exempt from paying the 4.5% excise tax, small practices and clinics must pay it ― and are not allowed to pass it on to the patients with government insurance.
Hilo Radiologist Dr. Scott Grosskreutz spoke for the Hawaii Provider Shortage Crisis Task Force.
“With skyrocketing inflation rates and decreasing reimbursements every year, there are a lot practices on the verge of going under,” he said, mentioning some Hawaii Island clinics specifically.
“They are basically losing 10s of thousands of dollars despite the fact they are very busy,” Grosskreutz said.
Dr. Cindy Pau, who said she runs a small practice in Honolulu, said the extra cost makes doctors less willing to accept new patients on the government programs.
“So that is why it is limiting access to patients with Medicare, Medicaid and Tricare,” she said.
“This is not a physician problem this is a patient access problem.”
Dr. Esther Smith, who runs a family medicine clinic in Kealekekua, said her practice is surviving thanks to her retirement savings.
“Physicians frequently shy away from the entire concept that it’s a funding problem, but it is,” she said.
“Changing the tax would change things for us into the future.”
The exemption still faces two more committees in the Senate, but was among the first tax measures to win early support.
The House Economic Development Committee pushed forward bills that would:
- Establish a $500 child tax credit per child for families with incomes under $60,000;
- Raise to increase and expand eligibility for the food tax credit;
- And repeal of the excise tax on groceries.
The grocery exemption was supported by the Hawaii Food Industry Association. Executive Director Lauren Zirbel pointed out the bill would only exempt non-prepared food items, meaning prepared foods and restaurant meals would still be taxed.
Zirbel said Hawaii is one of very few states that tax basic food supplies.
“So it truly is regressive to tax these items because people actually need this to live and lower income individuals spend a much higher percentage of their income on groceries than higher income individuals,” she said.
It is still early in the legislative session so while these tax relief ideas are among the first to move along they still have a ways to go and will be weighed against competing tax break ideas and big spending plans.
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