The Hawaii House of Representatives has proposed a bill that will increase funds provided to Hawaii Island from the transient accommodations tax (TAT), called the hotel room tax, totaling more than $12 million.
This bill is a win-win for Hawaii Island residents because it will provide much-needed money for tourism-related expenses such as park maintenance, police and fire protection, and infrastructure repairs — public services and recreational areas that are used extensively by tourists but are also enjoyed by residents.
The TAT is paid for by hotel guests to the state and allocated to several groups, including the counties, to pay for visitor related expenses. Remember, these taxes are almost entirely paid for by tourists staying in our hotels. This shifts the cost to visitors with minimal impact on visitor spending.
During the 2017 special legislative session, lawmakers voted to raise the TAT by 1 percent to immediately address the shortfall of Oahu’s rail project. This is just $1 on a $300 room.
County officials and residents testified at the hearing that they desperately needed a larger share of the TAT and were not happy that the taxes were being used for rail on Oahu. Representatives from all the neighbor island then worked together to address this concern while continuing to address many issues that still require attention.
That is why we have amended Senate Bill 648 SD1 HD1, to increase the amount of the TAT revenues for the neighbor islands including:
• Increasing Hawaii Island’s TAT revenues from $19.1 million to $31.2 million.
• Increasing Kauai’s TAT revenues from $14.9 million to $24.3 million.
• Increasing Maui’s TAT revenues from $23.4 million to $38.3 million.
The TAT amount for the city and county of Honolulu is unchanged for a total of $45.4 million per year.
I hope you will all agree with me that this is a great opportunity for the neighbor island counties and support our efforts to get this bill passed.
This is a short-term fix, as we as a state must closely examine our tax policy to rebalance and refocus the amount of each tax and examine what those taxes are paying for. Only by doing this will we be able to create a more equitable tax policy that addresses the high cost of living in Hawaii.
Rep. Mark Nakashima represents the first district, including Hamakua, North Hilo, and South Hilo.