Local leaders aim to move quickly on new county TAT
Mayor backs max amount; committee to hear proposal for max surcharge
In the wake of the state’s far-reaching decision to take the counties’ shares of transient accommodation taxes, local leaders are hammering out logistics on how to levy Maui County’s own visitor lodging tax in order to recoup losses.
“There are a lot of logistics that need to be worked out for us to collect it,” county Managing Director Sandy Baz said on Wednesday evening. “Mayor Victorino wants to get the process and the taxes figured out as soon as possible.”
Maui County Council Vice Chairwoman Keani Rawlins-Fernandez, who leads the council’s Budget, Finance and Economic Development Committee, echoed the need to move quickly.
“After receiving zero TAT from the state last fiscal year and zero again this fiscal year, I’m expediting legislation to establish our county TAT to help mitigate the harmful impacts our people, environment, and resources have been experiencing from the effects of over tourism,” she said Wednesday evening.
The Budget Committee was scheduled Wednesday afternoon to take up a proposed bill to implement a 3 percent transient accommodations tax on all gross rental, gross rental proceeds and fair market rental value considered taxable under a section of Hawaii law. The item was deferred to Aug. 18 due to meeting time constraints.
Baz after the meeting said Maui County officials are working with the state and other counties to create a completely new system to assess, levy and collect the taxes. He pointed to his Aug. 3 letter to the committee, which said a definitive response on how the TAT system should operate is not yet available.
In order to develop a system, officials are considering language and requirements outlined in the new law, the state’s existing structure and process for collection, the county’s effort and resources required to establish a structure and process, and the abilities of the four counties to coordinate on the effort, among other details, Baz said in the letter that responded to questions from Rawlins-Fernandez.
State lawmakers last month overrode the governor’s veto of House Bill 862, which takes visitor lodging taxes from counties and changes the way the Hawaii Tourism Authority is funded. The new law, called Act 1, also authorizes the counties to establish their own surcharge of up to 3 percent on the existing 10.25 percent rate for visitor lodgings.
Historically, TAT was collected from hotels and other lodgings that host guests for fewer than 180 days and then distributed among the counties and the state to fund things like state parks and trail maintenance and marketing for the Hawaiian Tourism Authority, with the remainder going into the state general fund.
In the past, Maui County’s annual share of the TAT was around $23.5 million of the $103 million in transient accommodations taxes distributed to the counties.
Kauai may be the first county to impose its own TAT. Even before Act 1 was enacted, Kauai county lawmakers were already moving on a proposed bill to establish a 3 percent TAT on all gross rentals, gross rental proceeds and fair market rental value considered taxable to be collected each month, according to The Garden Island.
Mayor Michael Victorino has said he supports collecting the maximum 3 percent, with 1 percent going toward developing affordable housing, 1 percent for emergency services including ocean, land and air rescues, and 1 percent to fund visitor education and cultural restoration throughout the county.
Of course, hotel industry leaders are concerned about the potential spike in taxes, and the Hawaii Lodging and Tourism Association submitted testimony for the committee meeting Wednesday, urging against the county imposing a 3 percent surcharge.
“It is our position that now is not the time to levy additional tax burdens on businesses that have been disproportionately affected by the pandemic,” Mufi Hannemann, president and CEO, wrote. “Should the council enact an additional three percent surcharge, or a thirty percent increase to the TAT, it would make the county among the highest taxed municipalities for travelers in the nation.”
He also said the surcharge would elevate the cost of brick and mortar properties and force budget-conscious travelers to use illegal short-term rentals.
* Kehaulani Cerizo can be reached at firstname.lastname@example.org.