CHAIR’S 3 MINUTES
Published in the Maui News, September 10, 2017
By: Mike White
Now that the state Legislature’s special session is completed, the County Council and the Hawaii State Association of Counties turn their focus on prioritizing initiatives for the legislative session that begins in January.
One of Maui County’s proposals that will be sent to HSAC for consideration is an amendment to the transient accommodations tax, Hawaii’s hotel room tax. Another proposal would increase revenue for each county’s affordable housing fund through a conveyance tax applied to luxury properties.
The proposed legislation to revamp TAT collections would allow for millions of dollars previously uncollected to fund necessary services and infrastructure improvements at the county level.
When a consumer purchases a hotel stay from an online remarketer, for example, at a rate of $200 per night, an additional 13.42 percent (4.167 percent general excise tax and 9.25 percent TAT), or $26.84, is also paid to the online company for a total of $226.84.
Presently, the state does not collect the full amount of TAT from accommodation remarketers like Expedia or Orbitz. A remarketer, in most cases makes, its profit by marking up a hotel stay, which it receives at a wholesale price, let’s say $150.
Remarketers are required to pay GET taxes on the $200 rate. Because of the way Hawaii’s TAT law is written, TAT only needs to be paid to the state on the wholesale price of $150, not the $200, despite consumers paying taxes on the higher amount. Remarketers currently pocket the difference between taxes collected and what is required to be paid to the state.
Calculations indicate the state is likely missing out on upwards of $1,100 per hotel room, per year. If the state simply changed the law, it could generate almost twice the revenue expected from the recently passed Senate Bill 4 signed into law by Gov. David Ige. SB 4, commonly referred to as the Honolulu rail bailout, increased the TAT on all islands by 1 percent to 10.25 percent for the next 13 years.
The second proposal hopes to generate revenue for affordable housing by imposing a 1 percent conveyance tax on high-end luxury properties over $2 million. The revenue generated from the tax would be deposited into each respective county’s affordable housing fund where the property was sold. The measure is intended to assist each county to accelerate efforts to create additional affordable housing.
Both proposals will now be forwarded to the HSAC, which then creates a package for every county council to evaluate. HSAC’s subsequent compiled package of bills is then introduced at the start of the legislative session in January and is a representation of the counties’ needs for the upcoming year.
At Friday’s council meeting, I also proposed a resolution urging the Legislature to require itself to abide by the Sunshine Law, which ensures transparency and open meetings. This resolution has the potential to end closed-door decision-making.
Currently, the state does not adhere to the same agenda-posting and open, public meeting rules it requires of all councils, boards and commissions.
It is in the best interest of the public for this change to occur to ensure government is truly open and transparent to the people. I hope the Legislature will seriously consider this request.
At the same meeting, the council also officially congratulated the Hawaiian Canoe Racing Association for capturing its 15th state canoe championship title in early August. We are fortunate to have such talented athletes here in Maui County. Imua!