With record tourism to Hawaii, more scramble for the growing 'room tax' pie

With record tourism to Hawaii, more scramble for the growing 'room tax' pie
(Image: Hawaii News Now)
(Image: Hawaii News Now)

HONOLULU (HawaiiNewsNow) - Last fiscal year, the state collected $452 million in taxes from hotel rooms and time-share rentals.

After allocations from the transient accommodations tax to the counties and the Hawaii Tourism Authority, $236 million was left over -- and there's no shortage of requests for some of it.

"People see the TAT as the cash cow," said state Sen. Glenn Wakai, chairman of the Economic Development, Tourism and Technology Committee. "Everybody wants a piece of the action. They feel that they pay in and they should get the money out."

The TAT has been growing in recent years, thanks to record Hawaii tourism. And that means there's even more competition for the tax dollars.

This year, service providers for the homeless want $2 million in TAT funds. And already, Takai has rejected two requests from Native Hawaiian enrichment programs for hotel tax funds.

"They should line up and tell us why it's a worthy program, and we should fund it out of general funds," Wakai said.

Every year, tax experts say, many organizations and individuals want the money automatically from tourist funds so they don't have to ask annually.

Tax Foundation of Hawaii President Tom Yamachika said that's problematic.

"They want dedicated pots of money so they don't have to deal with appropriations at the Legislature. They just get the money and run," he said.

He added, "As many interests there are out there you'll probably find bills (for TAT funds) that correspond to those interests."

HTA gets $82 million a year from hotel taxes to market Hawaii.

But Wakai thinks the authority should help University of Hawaii athletics from funds HTA gets for the Pro Bowl.

"Why not use $3 million of that $5.1 million to help defray the travel expenses for the University of Hawaii?" he said.

The hotel tax is one of the state's largest sources of revenue, after the excise tax and personal and corporate income taxes. And because leftover TAT money is mingled into general state operating expenses, it's next to impossible to know exactly where those dollars go.

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