While it can be said that the Hawaii sales tax is 0%, the general excise tax in Hawaii is 4% and the transient accommodation tax in Hawaii is 6%. The 4 percent tax that is collected as the general excise tax in Hawaii is assessed on all types of business activities that include rental income and services, commissions and retail sales. From 1st January 2007, Oahu levies an additional 0.5 % surcharge on the general excise tax and the revenue that is generated goes to the mass transit system of Honolulu County. Apart from the 4% general excise tax in Hawaii, the tax rate on the wholesale transactions is 0.005%.
In Hawaii the general excise tax is assessed and collected by the State of Hawaii Department of Taxation. The department is also the authority to issue general excise tax license in Hawaii and imposes tax on almost all kind of transactions.
A sales tax typically means a tax that is imposed on the consumers while they go for any purchasing and hence the sellers collect the sales tax from the consumers and then pay it to the government. The Hawaii tax system says that here the general excise tax is levied on the gross income that is derived from the business activity in Hawaii and it differs from the conventional sales tax system in the country. The prime difference between the excise taxes with sales tax is that the excise tax is imposed on the business instead of the consumer. Hence it can be concluded that the excise taxes in Hawaii are the added expense on the businesses along with other expenses like cost of inventory, utility bills, labor costs, supplies and others. The process of taxation creates some ambiguity in the price of the product, as the business may not mention the tax separately.
