HB937 would exempt grants received by eligible businesses from the federal Restaurant Revitalization Fund (RRF) from Hawaii’s general excise tax (GET). The bill states that these grants, created under the American Rescue Plan Act of 2021 to help food and beverage businesses recover from COVID-19-related revenue losses, should be treated similarly to certain other federal pandemic relief amounts that the Department of Taxation has already said are not subject to GET, such as forgiven PPP loans and EIDL advances.
The bill also requires that any GET already paid on RRF grants be refunded to the taxpayer, and it applies retroactively to taxable years beginning after March 11, 2021. In practical terms, the measure would change how Hawaii taxes federal restaurant relief funds and could require the state to issue refunds for taxes previously collected on those grants.
Impact
HB937 would amend the application of chapter 237, Hawaii Revised Statutes, by carving out an exemption from the general excise tax for RRF grants received by eligible businesses under ARPA. It would also create a refund obligation for taxes already paid on those grants, potentially affecting both taxpayers and state revenue collections for prior taxable years beginning after March 11, 2021. The bill primarily affects food and beverage businesses that received RRF assistance and the Department of Taxation, which would need to administer the exemption and any resulting refunds.
Sentiment
The bill appears to have a generally supportive policy rationale, grounded in pandemic-relief fairness and parity with other federal aid programs that were already exempted from GET. The findings emphasize that RRF grants serve a purpose similar to PPP and EIDL relief, suggesting the measure is intended to correct an inconsistency in tax treatment. No committee votes or hearing transcripts were provided, so there is no recorded formal opposition or support in the available materials beyond the bill’s stated justification.
Contention
The main point of contention is likely the retroactive refund feature, which could reduce state revenues and require administrative processing of prior tax payments. Another possible issue is whether RRF grants should be treated the same as PPP and EIDL relief under Hawaii tax law, since the Department of Taxation reportedly concluded in 2024 that the existing exemption did not extend to RRF grants. Supporters would likely focus on equitable treatment of pandemic aid and relief for small businesses, while any opposition would likely center on fiscal impact, retroactivity, and the scope of the exemption.
A resolution to direct the Clerk of the House of Representatives to only present to the Governor enrolled House bills finally passed by both houses of the One Hundred Third Legislature.
Relating to nonsubstantive additions to, revisions of, and corrections in enacted codes, to the nonsubstantive codification or disposition of various laws omitted from enacted codes, and to conforming codifications enacted by the 88th Legislature to other Acts of that legislature.