Controversial bill to tax vacation rentals dies in tied Senate vote

HONOLULU (HawaiiNewsNow) - A bill that would have collected transient accommodations taxes from vacation rental platforms has died in a tie vote in the state Senate.

The 12-12 vote came after impassioned discussion over whether the state should be collecting taxes from illegal vacation rentals without cracking down on them.

State Sen. Glenn Wakai, who chairs the Economic Development and Tourism Committee, argued that it wasn’t the state’s job to determine whether the rentals are legal.

“When it comes to controlling where and how many TVR’s (transient vacation rentals) exist, that is not our kuleana,” Wakai said on the senate floor. “Ours is to collect taxes rightfully due to the state.”

Senate Ways and Means Chairman Donovan Dela Cruz said the measure would have brought in an estimated $46 million, money he said would be needed to fund other programs already approved by lawmakers in the past few days.

“There are other bills that are going to be impacted, and that would’ve been good to know that we weren’t going to have that $46 million last week,” Dela Cruz said.

Opponents, including many in the hotel and lodging industry, said collecting transient accommodations taxes would legitimize what they said are illegal rentals that are pushing residents out of homes that they are renting on a long-term basis.

“What we’re experiencing in our communities is a rapid local housing death,” said Sen. Laura Thielen (D-Hawaii Kai, Waimanalo, Kailua). “but it’s not visible because you drive down the street and the houses are still there.”

“If they’re doing illegal activity we should not then condone that by saying that’s okay, just give us the check. Give us the money because we need it,” said Sen. Gil Riviere, a Democrat whose district includes Oahu’s North Shore.

The bill was also opposed by Expedia, not because of the tax collection.

“While we support components of the bill -- including tax collection and remittance -- we remain deeply concerned with provisions that could jeopardize the data of our customers and violate federal law,” said Philip Minardi of Expedia Group, in a statement.

The bill would have required the vacation rental platforms to disclose where the properties are and their owners, but lawmakers in the House put in a provision to keep that information confidential.

“SB 1292 failed tonight because the state senate recognized that this was a tax grab that would have deemed license and legitimized illegal rentals in our communities,” said Kekoa McClellan, a spokesman for the American Hotel and Lodging Association, following the vote.

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