Hawaiʻi is considering replacing its general excise tax (GET) with a mainland-style retail sales tax. Proponents believe the GET, which taxes both goods and services, hinders economic growth and that a sales tax would improve the business climate. However, since services make up 60% of the GET base, a goods-only sales tax would need a significantly higher rate, around 10%, to match current revenue. The GET also faces criticism for “tax pyramiding,” where businesses tax the tax they pass on to customers, a problem that a sales tax could fix. Ultimately, a new sales tax may not solve the issues with taxing services and might not deliver the expected economic benefits.
Source: tfhawaii.org
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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