Rail funding, Honolulu City Council weighted property tax hike in new tax bill

HONOLULU (KHON2) – A bill to tax visitors to Oahu progressing through Honolulu City Council. The 3% tax will help replenish county funds after losing about $ 45 million from the state.

For years, the Transitional Accommodation Tax (TAT) was designed to mitigate tourism impacts on the Hawaiian Islands, as it was collected by the state and distributed to counties. Now the new state law allows counties to collect them themselves at a maximum of 3%, but some council members are concerned that the money will go to the Honolulu rail project.

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Under Bill 40, Honolulu could collect up to $ 7 million per month.

“We have to fill this $ 45 million puka, and that’s the first thing the bill does,” said Tommy Waters, chairman and chairman of Honolulu city council.

This money would be divided between:

  • Support for parks and natural spaces
  • General fund for things like police, fire and rescue costs
  • The Honolulu Rail Project

“Now we have a bill before us that would use this money that was supposed to help tourists pay for the train,” said Heidi Tsuneyoshi, member of Honolulu City Council.

The amount of income that would accrue to each has not yet been determined. Some council members warn of another option to make up the lost $ 45 million – an increase in property taxes.

“If no action is taken on that 3%, it’s not $ 45 million, so we can cut the budget,” said Calvin Say, member of Honolulu city council. “Let’s be honest with ourselves, I’ve said this publicly to all of us in this room. We do not agree to increase property taxes for our residents.

Honolulu Mayor Rick Blangiardi fully supports the bill but is not yet sure how much of the revenue will be used for the rail.

“Obviously, I have no apprehension about where the rest of these resources are allocated. We’ll figure out what it is once we can work out the details to offset the cost of the rail, ”Mayor Blangiardi said.

As the economy continues to recover from the COVID pandemic, some industry experts have warned against imposing a tax on Hawaii’s economic engine.

“This is an unfortunate time for any kind of tax increase on a struggling industry,” said Mufi Hannemann, president and CEO of Hawaii Lodging and Tourism. “We hope that the majority of these funds, if not all, will go to specific tourism projects and initiatives.”

There is another belief that tourists will continue to pay to come to the islands even with 3% added to the state’s 10.25% TAT.

“We are a premium destination, and we can charge a higher price and tourists are willing to come, as long as we continue to provide this product and the beaches are clean,” University of Hawaii at Manoa Travel Industry Management said on Professor Jerry Agrusa.

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Some board members have also proposed removing the tax for Kama’aina, which they plan to discuss in future committee meetings and readings. The bill passed first reading on Wednesday, October 6.

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