HONOLULU -- Opponents of the transit tax bill said the proposed excise tax hike from 4 percent to 4.5 percent will have a devastating effect on Hawaii residents, costing them hundreds more dollars each year than they realize.

Hawaii's excise tax is very different from sales taxes on the mainland. The sales tax is imposed only at the final sale of goods. In Hawaii, the excise tax is slapped on all goods and services at every stage.

For example, take a 10-pound bag of rice. The excise tax was paid many times to get the rice to the shelf. The tax was added from the wholesale cost to trucking it to the store, even on the storeowner's rent. All of those tax cost hits are passed on to the customer.

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Discussion: Transit | Taxes

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So, the visible tax is 20 cents on $5, but the real tax is really 65 cents or 70 cents.

Tax attorney Ron Heller maps out how the excise tax is imposed at many points yet and passed on in the final cost to the customer. He said Hawaii's excise tax is really equivalent to a 13 percent sales tax.

"I mean, for most people it is a lot more than they suspect it is," Heller said.

If the excise tax increases, more taxes will be passed on to the customer in a higher product cost.

"You won't see it on the tax side. What you will see is: 'Oh my goodness. That bag of rice I paid $4.99 for two years ago, now I am paying $5.75 or even $6 for that bag of rice,'" Heller said.

"The increase in the cost of a single bag of rice may not seem like much, but when you consider you will be buying groceries all year long, groceries that are going to cost more, it will really add up," said Lowell Kalapa of the Tax Foundation.

Some lawmakers said the tax will eventually have to be hiked a full percentage point to pay for the real cost of transit.