Tax bills for vacation rentals and REITs among items on governor’s veto list

Updated: Jun. 24, 2019 at 8:38 PM HST
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HONOLULU, Hawaii (HawaiiNewsNow) - Gov. David Ige said he will veto a measure that will allow vacation rental platforms like AirBNB to collect taxes from owners.

The bill is among 20 on the governor’s veto list, which was made public today. Ige said he also plans to veto a measure to tax large landowners known real estate investment trusts.

“We want to make sure there’s no adverse, unintended consequences,” he said.

Ige said the vacation rental measure, or SB 1292, was written before the City Council passed its effort to regulate the vacation rental industry.

The city bill caps the number of legal bed and breakfasts to about 1,700 units and proposes stiff fines for operating and advertising illegal short-term rentals.

Right now, the city estimates there are about 10,000 operating without proper permits.

AirBNB, which supported the tax proposal, urged the governor let the bill stand. Expedia said it supported a veto.

“We hope a veto will provide us all an opportunity to come together and work with the Governor and state legislators to develop holistic policies that can be enforced while upholding the law to protect our customers,” said Expedia spokesman Philip Minardi.

The governor also said taxing REITs, which have pumped billions of dollars into Hawaii’s economy, sends the wrong message to the business community.

“There may be negative impacts to the state’s economic health and business climate," he said.

Taxing REITs and vacation rentals could generate as much as $56 million a year. Some of that money is already pledge to pay for other state programs.

One controversial bill that will survive is marijuana decriminalization. It would end criminal penalties for people with three grams or less.

“Three grams is a very small amount of marijuana," Ige said.

The final day to formally veto the bills is July 9.

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