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Counties eye hotel room tax hikes as state seeks to divert revenues to general fund

Published: Apr. 28, 2021 at 10:50 PM HST|Updated: Apr. 28, 2021 at 10:53 PM HST
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HONOLULU, Hawaii (HawaiiNewsNow) - A bill to take tourism tax revenue away from the counties would likely lead to higher taxes for tourists.

Currently, there is a 10.25% tax on all Hawaii transient accommodations like hotel rooms and vacation homes. House Bill 862 would give all that money to the state rather than the counties.

Under this bill, counties would lose about $103 million.

However, to make up for the lost funds, counties would be able to impose their own additional hotel tax of up to 3% — bumping the total hotel room tax to more than 13% per night.

Maui County Mayor Mike Victorino is already making plans to bridge the gap.

He said he’d like to increase the hotel room tax by 3% to send additional funds to affordable rentals, first responders and for historic preservation.

Hawaii County Mayor Mitch Roth, meanwhile, says the bill puts counties in a tough spot.

“We’re going to add another tax to our tourists and actually that’s a gamble whether the tourists are going to come back,” Roth said.

“There’s a lot of people, especially in the hospitality industry, and a lot of people who have already been struggling. Are we going to ask them to struggle more? Are we going to gamble with their livelihoods and friends, their family’s livelihoods by putting this bill into effect?”

Kauai County’s mayor said his county needs that revenue.

“The county needs TAT revenue to balance our budget and provide critical services to both our residents and visitors — such as police, fire and ocean rescues,” said Mayor Derek Kawakami.

“We look forward to working with our state and county partners to determine the best way for our county to get our share of TAT.”

The governor has until June 21 to announce which bills he intends to veto.

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