HLTA Opposes Bill to Raise Transient Accommodation Tax to Fund Honolulu Rail

A last minute proposal was made to amend Senate Bill 1183, which would raise the Transient Accommodations Tax revenue to fund the Honolulu rail project and education.

Tourism. Photo by Wendy Osher.

Yesterday, The Hawai‘i Lodging & Tourism Association said, “we express our deepest disappointment in the last-minute proposal made to amend Senate Bill 1183, we are not opposed to rail or to improvements to our public education system; however, we believe that this tax should not be targeted solely at the tourism industry.”

The HLTA said that the proposal came at the eleventh hour during conference committee and provided no opportunity for the public to provide input or testimony.

The HLTA continued: “The proposed tax increase would raise our 9.25% TAT to 12%, a 30% hike that is unprecedented for our industry. The proposed TAT in combination with the General Excise Tax would impose a 16.7% tax on visitors and residents who patronize our accommodations, adding to Hawai‘i’s unfortunate reputation as one of the most expensive places to visit. With the proposed tax increase, Hawai‘i would surpass New York City (16.5%), Los Angeles (15.8%), and Miami Beach (14%), on the list of highest lodging tax rates in the nation. San Francisco is only marginally higher at 16.8%. This puts us at a competitive disadvantage that could lead to fewer visitors and less visitor spending, and cause a ripple effect that may negatively impact small businesses in our community.

To remain competitive, it is likely that hotels will not pass the increased tax on to guests and instead absorb some of the burden, ultimately leading to staffing cutbacks.

Though Hawai‘i’s visitor industry is strong right now, there are growing signs of a tourism downturn on the horizon. With the TAT being a highly volatile and much smaller revenue source than the GET, it would be unwise to depend solely on the hotel room tax to fund the city project. On the other hand, the GET is a much fairer tax as it is paid by both residents, who will largely benefit from rail, as well as visitors.

For these reasons and more, we are strongly urging the legislature to reject Senate Bill 1183 and fund rail by extending the GET.”

The HLTA released another statement today after a newly proposed Senate floor amendment regarding Bill 1183 was issued this morning which raises the transient accommodations tax by 1%.

“On behalf of the Hawai‘i Lodging & Tourism Association we remain consistent with the statement we issued yesterday in that we are opposed to tapping into the TAT as a funding mechanism for Honolulu’s rail project and continue to believe that the GET is the more appropriate funding mechanism. We support all legislative measures to replace the TAT with the GET.

As we stated previously, though Hawai‘i’s visitor industry appears to be robust, there are growing signs of a tourism downturn on the horizon. With the TAT being a highly volatile and much smaller revenue source than the GET, it would be unwise to depend solely on the hotel room tax to fund the city project. On the other hand, the GET is a much fairer tax as it is paid by both residents, who will largely benefit from rail, as well as visitors.

As the largest private-sector tourism association representing nearly 700 members, 168 of which are hotels, we are strongly urging the Legislature to reject Senate Bill 1183 and fund rail by extending the GET. Any other statements or positions purporting to represent the visitor industry that does not reflect points made in this press release does not represent the HLTA and the hospitality industry.”