Legislation OK’d Tuesday gives counties the ability to impose extra hotel tax of up to 3% – Honolulu, Hawaii

Honolulu, Hawaii 2021-05-08 10:52:08 –

Four counties in Hawaii can impose their own additional hotel room tax under a bill that passed a final reading on Tuesday in the state legislature.

House Bill 862 experienced some controversial changes in the process of passing through the state legislature. In early April, legislation, previously primarily related to the restructuring of state management for two aerospace programs, was amended, significantly reducing the Hawaii Tourism Board’s obligations and funding.

The bill was discussed by a congressional committee over the weekend and was finally read in yet another form by both chambers on Tuesday. This has restored much of the HTA’s resources, but has made significant changes to the way the state handles temporary accommodation taxes.

According to the Department of Business, Economic Development and Tourism, TAT is currently a 10.25% tax levied on temporary accommodation such as hotel rooms and villas, generating approximately $ 640 million in 2019.

Of that revenue, about $ 100 million is distributed to each county each year. This year, Hawaii County will receive approximately $ 19 million in TAT revenue.

The latest version of the bill will completely remove the county’s TAT ​​revenue allocation and fund the state’s general financial resources.

Instead, the county can impose a county-wide TAT at a rate of up to 3% in addition to the current state-wide TAT.

These changes (which further increase the tax per hotel room) are consistent with additional changes that limit HTA resources. The latest version of the bill will completely abolish the non-urgent tourism special fund, which is the source of HTA funding that would have been allocated $ 79 million in TAT revenue this year.

However, the bill allocates $ 60 million to HTA from the US Rescue Planning Act for the 2021-22 fiscal year.

When the bill was finally read in the House of Representatives on Tuesday, some lawmakers expressed concern that the TAT change would significantly reduce revenues in individual counties.

Maui Rep. Tina Wildberger said Maui would only receive one-third of the $ 22 million normally received with a TAT allocation. However, Congressman Chris Todd said total county revenues could actually increase as long as visitor numbers and TAT revenues return to normal.

Other lawmakers said the bill’s changes represent an opportunity for state governments to restructure their dependence on tourism.

“For years and years, the Hawaii Tourism Board has enjoyed not only incredible autonomy, but also guaranteed funding,” said Sean Quinnlan, a member of Oahu. “And they produced results: 11 million visitors a year. But I submit … probably they weren’t the results we really wanted. Ask my members. On average, too many people are spending too little money per capita, so the impact of the visitor industry is beginning to outweigh the benefits in many parts of Hawaii. “

Rep. Sony Ganaden of the attack on Pearl Harbor said the state was far behind in controlling the amount of taxpayers spent on the tourism industry.

“This bill represents a test, a test of whether trickle-down economics works in real time,” said Ganaden, who would otherwise replace the taxpayer’s dollars spent on public relations for the state’s hotel industry. He added that he wanted to be. Spent to improve the taxpayer’s own life.

“This year is the year to rebuild our government, and this pandemic makes it possible for us,” said Waikiki Congressman Adrian Tam. “And if this bill doesn’t work, I think we can always come back.”

Not all lawmakers were so optimistic.

Hawaii Kai Rep. Jean Ward foresaw only the problems that arose from the bill.

“We wanted to unify the community from a SafeTravels Hawaii perspective, but now we’re going to impose different types of taxes on different hotels on different islands,” Ward said. “I have serious doubts that this policy will never reach a good one.”

“This bill is very different from the draft we signed earlier this year,” said Wildberger. “I am very grateful for handling HTA spending, reducing funding and being accountable. I am very grateful for the TAT tax that the sister island counties are tasked with creating themselves. I’m against the reduction. “

Despite some lawmakers’ concerns, the bill passed final readings in both the House of Representatives and the Senate, with only six representatives and two Senators voting against it. Senator Hiro Acacio was the only Big Island councilor to vote against it.

The bill is forwarded to the governor, who decides whether to sign it. By June 21, Ise must announce a bill that will exercise his veto this year.

Send an email to Michael Brestovansky (mbrestovansky@hawaiitribune-herald.com).

Legislation OK’d Tuesday gives counties the ability to impose extra hotel tax of up to 3% Source link Legislation OK’d Tuesday gives counties the ability to impose extra hotel tax of up to 3%

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