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Hawaii GET
Old 10-23-2010, 08:12 AM   #1
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Hawaii GET

I have a fairly narrow question on the Hawaii General Exercise and Use Tax (GET). I apologize if its been asked and answered before.

I will be joining the retirement class of 2011 next summer, and DW and I will relocate to the West Coast. We have narrowed our list of retirement locales to Washington (Olympic Peninsula), Oregon, Hawaii, or Nevada (Las Vegas). I know, these places are quite a bit different, but each holds some form of attraction for us. Will be visiting them again over the next six months to aid us in our decision.

I know Hawaii has an odd tax system. Income taxes are low for retirees, particularly retirees with federal/military pensions (and I will have both), and that is great. I also know, however, that the Hawaii GET is a hidden tax, assessed through the production and distribution chain, and can raise the price of goods considerably.

Here is my question. Are goods sold through the military bases (PX or BX) subject to the hidden GET? In my experience in the 48 continguous states, commissary (food) prices are an excellent deal, while PX (department store goods) are not always much better price-wise than what you can expect from, say, Walmart. But in Hawaii, maybe this is not so. Maybe PX items are cheaper, particularly if they are not subject to the GET. Does anyone know? Has anyone compared the price of similar items in the PX or BX vs. the Walmart/Target type stores?

Thanks in advance!

OhSoClose
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Old 10-24-2010, 10:35 AM   #2
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Originally Posted by OhSoClose View Post
I have a fairly narrow question on the Hawaii General Exercise and Use Tax (GET). I apologize if its been asked and answered before.

I will be joining the retirement class of 2011 next summer, and DW and I will relocate to the West Coast. We have narrowed our list of retirement locales to Washington (Olympic Peninsula), Oregon, Hawaii, or Nevada (Las Vegas). I know, these places are quite a bit different, but each holds some form of attraction for us. Will be visiting them again over the next six months to aid us in our decision.

I know Hawaii has an odd tax system. Income taxes are low for retirees, particularly retirees with federal/military pensions (and I will have both), and that is great. I also know, however, that the Hawaii GET is a hidden tax, assessed through the production and distribution chain, and can raise the price of goods considerably.

Here is my question. Are goods sold through the military bases (PX or BX) subject to the hidden GET? In my experience in the 48 continguous states, commissary (food) prices are an excellent deal, while PX (department store goods) are not always much better price-wise than what you can expect from, say, Walmart. But in Hawaii, maybe this is not so. Maybe PX items are cheaper, particularly if they are not subject to the GET. Does anyone know? Has anyone compared the price of similar items in the PX or BX vs. the Walmart/Target type stores?

Thanks in advance!

OhSoClose
Well, that's quite a spread in climates.

Federal facilities generally do not pay GET. The PXs & BXs don't pay GET. No GET at the liquor stores, gyms, outdoor activity centers, hobby shops, auto shops, or Information/Tours/Tickets outlets. Tricare does not charge GET on its office/prescription copays although the doctors (and their billing companies) frequently have to be educated on that. I don't think there's any GET at the military gas stations but it's difficult to tell from the receipt. Commissaries pay cost + 5% "surcharge" but no GET there either.

I don't know how the exchanges price their goods but there are no surcharges shown on the receipts. They probably do something similar to cost+5% but they frequently compete on price against Wal-Mart, Costco, and other big-box stores. It's worth shopping around for big purchases-- especially electronics, furniture, big appliances, and high-end recreational equipment, but not toaster ovens. Oahu Waipio Costco is rumored to be the island's biggest gasoline seller and they frequently price below the military gas stations. Both Wal-Mart and Costco coupons will bring their prices below the military stores, although the commissary does semi-annual parking-lot sales that beat everyone's prices when you buy a pallet at a time. I don't know how the retail grocery stores can compete with any of the big-box stores or the commissaries but they do a lot of affinity programs and loss-leaders. I almost never go into a retail grocery store here unless I need something right now.

Overall I think the price difference between the island's big-box stores and the exchanges/commissaries is less than the 4.712%, especially when coupons & loss-leaders are part of your shopping.

Where you pay a "paradise tax", however, is shipping. No retail outlets here can compete with Mainland prices because of shipping. If you're frequently receiving heavy/bulky packages then it's worth joining ShipToHawaii.com just to consolidate air freight and save the obscene Mainland shipping prices. But you have to drive to the airport pickup instead of having Fedex come to your door.

If you try to eat a Mainland diet here then you will pay for it. Raspberries and blueberries are priced like gold bullion. Potatoes and strawberries are more expensive unless a local farmer happens to be growing them. Mango and starfruit are essentially free while bananas & papayas don't cost much. Meat can be expensive in some situations while fish is generally cheaper, but lobster & crab tend to be more expensive than the northwest coast. Huli huli chicken does such a high volume here that it's usually cheaper than Costco. Zippy's also sells such high volumes on chili that it's a good price. Kid's cereal is ridiculously expensive as are cow's milk and eggs (both of which are mostly shipped in from the Mainland). However the "healthy" cereals aren't much of a price difference, soy milk doesn't spoil, and Eggbeaters are cheaper.

You can also have some savings from living on an island in a tropical climate. These effects are a bigger difference than the GET will ever be.

For example, you drive less here. You're more likely to bike or walk, and when you do drive you can't rack up many miles on a 30x40 island unless you're commuting. You also drive more slowly here (higher MPG). Spouse and I may be an extreme case but our annual gas expenses run $1000-$1500 so shopping on Costco/military price doesn't have much impact.

If you choose your home carefully then you won't have any heating or A/C bills. (So don't live in Ewa Beach or some downtown locations.) We have a cold week or two in Jan/Feb where I wear a long-sleeve t-shirt, sweatpants, and maybe even socks around the house until 8-9 AM. We close all the windows and spend mornings in sunny rooms. There are maybe one or two days each Sep/Oct where the tradewinds stop and the daytime temps approach 90. We wear tank tops, leave all the windows open, spend the day in our shady rooms, and maybe even go out for lunch in an air-conditioned restaurant.

Electricity is more expensive here (~25 cents/KWHr on Oahu, higher on neighbor islands) but you use less energy. Hawaii has the nation's highest per-capita use of solar water heating, almost nobody has heating systems, and even in Ewa Beach you can get away without A/C much of the time. Photovoltaic systems pay back a lot more quickly at this latitude.

Recreation is cheaper. Instead of having to do indoor activities you can spend entire weekends at the beach or hiking the hills. Heck, when you're retired you can rent a beach cabin at White Plains or Bellows and spend the entire week there.

Clothing is ridiculously cheaper here. I buy a pair of running shoes every couple of years. I rarely wear pants, socks, shoes, and collared shirts. I almost never wear ties or jackets, and usually only on the Mainland. Here it's all t-shirts, shorts, & slippers. Rash guards are expensive because I wear them out pretty quickly. But I rarely shop retail there, either-- the Aloha Stadium swap meet and Goodwill.

Speaking of large purchases and shipping, you can do best by staying away from retail. When you're retired you have the time to patiently wait for a bargain to come your way instead of having to buy everything on a weekend before you go back to the office. When we buy large items like cars, furniture, big appliances, expensive electronics, and surfboards we shop on Craigslist. The island has a large transient population of military and emigrants who will be desperately selling before they have to go to the airport.

I'll happily pay the paradise tax to avoid being cold or having to sprint between A/C spaces. But Las Vegas is known as Hawaii's 9th island, and Washington's King County is notorious for cherrypicking our (working) police officers.

While you're serving out the rest of your working days, you could keep up with Hawaii prices by reading the local newspaper (staradvertiser.com). I'd also strongly recommend posting this question at HawaiiThreads.com.
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Old 10-24-2010, 01:45 PM   #3
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Don't know if I'll ever move to Hawaii, Nords, but I still love reading your posts and getting a taste of "real life" out there in Paradise.
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Old 10-24-2010, 04:28 PM   #4
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Originally Posted by Nords View Post
Well, that's quite a spread in climates.

Federal facilities generally do not pay GET. The PXs & BXs don't pay GET. No GET at the liquor stores, gyms, outdoor activity centers, hobby shops, auto shops, or Information/Tours/Tickets outlets. Tricare does not charge GET on its office/prescription copays although the doctors (and their billing companies) frequently have to be educated on that. I don't think there's any GET at the military gas stations but it's difficult to tell from the receipt. Commissaries pay cost + 5% "surcharge" but no GET there either.

I don't know how the exchanges price their goods but there are no surcharges shown on the receipts. They probably do something similar to cost+5% but they frequently compete on price against Wal-Mart, Costco, and other big-box stores. It's worth shopping around for big purchases-- especially electronics, furniture, big appliances, and high-end recreational equipment, but not toaster ovens. Oahu Waipio Costco is rumored to be the island's biggest gasoline seller and they frequently price below the military gas stations. Both Wal-Mart and Costco coupons will bring their prices below the military stores, although the commissary does semi-annual parking-lot sales that beat everyone's prices when you buy a pallet at a time. I don't know how the retail grocery stores can compete with any of the big-box stores or the commissaries but they do a lot of affinity programs and loss-leaders. I almost never go into a retail grocery store here unless I need something right now.

Overall I think the price difference between the island's big-box stores and the exchanges/commissaries is less than the 4.712%, especially when coupons & loss-leaders are part of your shopping.

Where you pay a "paradise tax", however, is shipping. No retail outlets here can compete with Mainland prices because of shipping. If you're frequently receiving heavy/bulky packages then it's worth joining ShipToHawaii.com just to consolidate air freight and save the obscene Mainland shipping prices. But you have to drive to the airport pickup instead of having Fedex come to your door.

If you try to eat a Mainland diet here then you will pay for it. Raspberries and blueberries are priced like gold bullion. Potatoes and strawberries are more expensive unless a local farmer happens to be growing them. Mango and starfruit are essentially free while bananas & papayas don't cost much. Meat can be expensive in some situations while fish is generally cheaper, but lobster & crab tend to be more expensive than the northwest coast. Huli huli chicken does such a high volume here that it's usually cheaper than Costco. Zippy's also sells such high volumes on chili that it's a good price. Kid's cereal is ridiculously expensive as are cow's milk and eggs (both of which are mostly shipped in from the Mainland). However the "healthy" cereals aren't much of a price difference, soy milk doesn't spoil, and Eggbeaters are cheaper.

You can also have some savings from living on an island in a tropical climate. These effects are a bigger difference than the GET will ever be.

For example, you drive less here. You're more likely to bike or walk, and when you do drive you can't rack up many miles on a 30x40 island unless you're commuting. You also drive more slowly here (higher MPG). Spouse and I may be an extreme case but our annual gas expenses run $1000-$1500 so shopping on Costco/military price doesn't have much impact.

If you choose your home carefully then you won't have any heating or A/C bills. (So don't live in Ewa Beach or some downtown locations.) We have a cold week or two in Jan/Feb where I wear a long-sleeve t-shirt, sweatpants, and maybe even socks around the house until 8-9 AM. We close all the windows and spend mornings in sunny rooms. There are maybe one or two days each Sep/Oct where the tradewinds stop and the daytime temps approach 90. We wear tank tops, leave all the windows open, spend the day in our shady rooms, and maybe even go out for lunch in an air-conditioned restaurant.

Electricity is more expensive here (~25 cents/KWHr on Oahu, higher on neighbor islands) but you use less energy. Hawaii has the nation's highest per-capita use of solar water heating, almost nobody has heating systems, and even in Ewa Beach you can get away without A/C much of the time. Photovoltaic systems pay back a lot more quickly at this latitude.

Recreation is cheaper. Instead of having to do indoor activities you can spend entire weekends at the beach or hiking the hills. Heck, when you're retired you can rent a beach cabin at White Plains or Bellows and spend the entire week there.

Clothing is ridiculously cheaper here. I buy a pair of running shoes every couple of years. I rarely wear pants, socks, shoes, and collared shirts. I almost never wear ties or jackets, and usually only on the Mainland. Here it's all t-shirts, shorts, & slippers. Rash guards are expensive because I wear them out pretty quickly. But I rarely shop retail there, either-- the Aloha Stadium swap meet and Goodwill.

Speaking of large purchases and shipping, you can do best by staying away from retail. When you're retired you have the time to patiently wait for a bargain to come your way instead of having to buy everything on a weekend before you go back to the office. When we buy large items like cars, furniture, big appliances, expensive electronics, and surfboards we shop on Craigslist. The island has a large transient population of military and emigrants who will be desperately selling before they have to go to the airport.

I'll happily pay the paradise tax to avoid being cold or having to sprint between A/C spaces. But Las Vegas is known as Hawaii's 9th island, and Washington's King County is notorious for cherrypicking our (working) police officers.

While you're serving out the rest of your working days, you could keep up with Hawaii prices by reading the local newspaper (staradvertiser.com). I'd also strongly recommend posting this question at HawaiiThreads.com.
Wow! Thanks for the info!

OhSoClose getting OhSoCloser . . .
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Old 10-24-2010, 11:34 PM   #5
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Wow! Thanks for the info!

OhSoClose getting OhSoCloser . . .
Probably far more than you really wanted to know, but hopefully a couple other of this board's Hawaii residents can chip in.

Quote:
Originally Posted by ProspectiveBum View Post
Don't know if I'll ever move to Hawaii, Nords, but I still love reading your posts and getting a taste of "real life" out there in Paradise.
Thanks!

Come visit in February. I'll be the ponytailed longboarder about 100 yards seaward of the eastern fenceline on White Plains Beach. If you don't already surf then I'll teach you how.
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Old 10-25-2010, 11:01 AM   #6
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A quick technical addition - unlike most sales and use taxes, the GET is levied on the person getting the receipts of a transaction so through Federal Supremacy Hawaii can't impose GET on sales by the Federal government. The Fed Gov't suppliers may have to pay the reduced rate wholesaler GET rate on their receipts if a third-party imported to Hawaii and then sold to the Fed Gov't - no line item cost but 'baked in' to the cost of the goods. If Fed Gov't buys in another state and imports to Hawaii there should be no GET at all. In reality it may vary by item purchased.

Also, the GET rate is similar to the sales taxes you would pay at any other retailer in a state with sales and use taxes (all your states except Oregon). Hawaii generally doesn't have a much higher overall state tax burden than other states with personal income taxes.

It's probably too much detail, but I'm a tax nerd and you asked.
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Old 10-27-2010, 03:04 PM   #7
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A quick technical addition - unlike most sales and use taxes, the GET is levied on the person getting the receipts of a transaction so through Federal Supremacy Hawaii can't impose GET on sales by the Federal government. The Fed Gov't suppliers may have to pay the reduced rate wholesaler GET rate on their receipts if a third-party imported to Hawaii and then sold to the Fed Gov't - no line item cost but 'baked in' to the cost of the goods. If Fed Gov't buys in another state and imports to Hawaii there should be no GET at all. In reality it may vary by item purchased.

Also, the GET rate is similar to the sales taxes you would pay at any other retailer in a state with sales and use taxes (all your states except Oregon). Hawaii generally doesn't have a much higher overall state tax burden than other states with personal income taxes.

It's probably too much detail, but I'm a tax nerd and you asked.
Thanks!
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