Amazon to charge tax on purchases made in Hawaii starting April 1st

AP Photo/Reed Saxon, File


You only have a few weeks left to shop on Amazon without paying a Hawaii tax.

Starting April 1, residents will see a 4-percent tax for purchases made on neighbor islands and 4.5-percent for purchases made on Oahu.

Hawaii residents who consider themselves avid Amazon shoppers aren’t happy with the news.

“I guess I’ll be against it. Makes things more expensive, right?” said Shem Kim.

“It’s a bummer, but for the most part, it’s what we’re going to have to do, I guess,” said Becky Gustafson.

The online retail giant already charges a tax on purchases made in most other states. A company spokeswoman would not comment on what led to the Hawaii decision.

Tom Yamachika, president of the Tax Foundation of Hawaii, says Hawaii was one of six remaining states that did not receive tax money from Amazon purchases made in-state.

“It seems to be under pressure. There have been efforts under many states to get them to collect these taxes,” he said.

Studies show the state loses out on $60 million annually when it doesn’t collect a tax from online retailers.

“What could have been done with that $60 million?” KHON2 asked Yamachika.

“Oh lots,” he replied. “All kinds of products, services, cost of government, paying down pensions.”

Yamachika says Hawaii could see $8.8 million annually from Amazon alone.

He adds that the tax could help level the playing field between online retailers and local stores.

Tina Yamaki with Retail Merchants of Hawaii says most people don’t realize that “when you shop online, you’re not supporting local businesses. You’re not supporting your neighbors and family who actually work in retail. That’s why we’re seeing so many stores now closing. Retailers’ profits are going down, and they’ll end up having to cut staff. It’s a bad ripple effect, especially in Hawaii.”

Gov. David Ige said in a statement, “The state will continue to seek ways to ensure that we collect taxes already owed. The revenue will help pay for vital services for the people of Hawaii.”

The Hawaii Department of Taxation had no comment on the matter.

Hawaii does not have a sales tax. Instead, it has a general excise tax (GET), which applies to Hawaii businesses, not customers. While it is common for businesses to charge their customers GET by visibly passing it on, it is not required by law.

In this case, since Amazon is not a Hawaii business, the tax collected is the Hawaii use tax.

According to the Department of Taxation: “The use tax equalizes the tax on a transaction by requiring those acquiring goods (for example, cars, clothes, jewelry, computers, equipment, etc.) from out-of-State sellers to pay a tax at the same rate that an in-State seller would have paid in general excise tax if the sale had occurred in Hawaii.”

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