Stores decide whether to tax bottle fee
The bottle fee is akin to a refundable sales tax. Can you clarify the need for a retail establishment to total the amount of the purchase with the fee and add a "sales tax" to both? It seems to be a tax on a tax.
Answer: In the early months of the state's bottle recycling law, the 5-cent refundable deposit fee and 1-cent nonrefundable handling fee were exempt from the state's general excise tax.
(The GET is not a sales tax, which is imposed on consumers. Instead, it is a tax on a business' gross income. It is up to a merchant whether to pass the GET visibly on to consumers as a separate charge, or to incorporate it into the price of a product or service.)
Initially, merchants were not supposed to be imposing the GET on the fees (Kokua Line, Nov. 2, 2004).
However, when we inquired again about the matter, we were told businesses actually could decide NOT to claim the GET exemption on recycling fees. If that's the case, "they can collect the tax," said Denise Inouye, supervising tax specialist with the state Department of Taxation.
But they would have to turn the collected tax in to the state. In that way, "they wouldn't be charging more than their liability," Inouye said.
So it's up to each retailer to decide whether to tax the fees or not.
The catch is, consumers wouldn't really know whether an establishment that is taxing the fees actually passes on the payment to the Taxation Department, Inouye acknowledged.
The department could take a complaint and investigate, but whatever it finds out would not be revealed to the complainant, because its findings on tax payments are confidential, she said.
Consumers who feel they may have been illegally charged the GET can file a complaint with the state Office of Consumer Protection. Call 587-3222.
Any merchant who charges the tax on the fees but does not pass it on to the state "would appear to be engaging in a practice that's in violation of the consumer protection laws," said Stephen Levins, executive director of the Office of Consumer Protection.
In your case, you were not taxed on the fees.
You provided a receipt from Longs Drugs Meheula Parkway showing an $18.99 charge for beer, plus $1.50 for the bottle deposit and 30 cents for the beverage handling fee.
The total was $21.68, including a 4.712 percent GET of 89 cents.
The tax was only on the cost of the beer. It would have been 98 cents if the bottle fees were included.
For clarification or more information, call the Taxation Department at 587-4242.
To rude people at Costco Iwilei, especially the person who cut me off with her cart during lunchtime on Friday, May 18. I was on crutches. When she stopped suddenly, I was hit from behind by a cart pushed by another shopper. That caused me to fall and injure myself further. Shoppers should learn to show more aloha. -- E. Osaki, Manoa
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