Mayor Alan Arakawa and Maui County Council Chairwoman Gladys Baisa will join elected officials from the state's other counties today in urging state lawmakers not to raid the counties' share of transient accommodations taxes, also known as the hotel room tax.
The $20 million to $22 million generated by visitors as Maui County's share of the tax is second only to property taxes as the leading source of income for the county's general fund, said Budget Director Sandy Baz.
If state Senate Bill 359 passes, repealing the distribution of hotel room tax revenue to the counties, Maui County will either need to raise property taxes or decrease its services, Baz said.
"If we don't get it, we may have to raise property taxes to pay our bills," Baisa said.
Baisa, Arakawa and the mayors of Honolulu, the Big Island and Kauai will be among county officials visiting lawmakers at the state Capitol to lobby against taking away the counties' share of the visitor tax income, the council chairwoman said.
The state Senate bill would authorize the counties to implement a surcharge of up to 1 percent on the 4 percent general excise tax to make up for the funding loss. Baz said that would broaden the tax base to all residents, rather than just visitors.
A 1 percent surcharge on the general excise tax would generate about $80 million for Maui County, he said, although the state would get 10 percent, or about $8 million, as an administrative fee.
Also, the mayor and County Council would be able to impose an amount of less than 1 percent, Baz said. For example, a surcharge of a quarter of 1 percent would bring in around $20 million, roughly replacing Maui County's annual share of the hotel room tax.
Maui restauranteur Beverly Gannon submitted written testimony opposed to the bill.
"Please do not pass this tax increase," she said. "Get out into the community and see how difficult it is becoming for businesses to stay in business. The increasing costs are staggering. And the double and triple taxation with our excise tax is absolutely horrible."
Classic Vacations President David Hu warned lawmakers in submitted testimony that Hawaiian vacations already are getting too costly for visitors.
"Our Hawaii customers already pay one of the heftiest tax rates for leisure vacation destinations," he said. "With the combination of high airfares, increasing room rates and continually high tax rates, our customers are feeling that Hawaii as a destination is already overpriced. Adding an additional tax burden on top of the existing cost would only exacerbate the situation."