GREAT-3(2) Reso 23-174 RESOLUTION 23-174, RELATING TO APPROVING FOR INCLUSION IN THE 2024 HAWAII STATE ASSOCIATION OF COUNTIES LEGISLATIVE PACKAGE A STATE BILL RELATING TO THE COUNTY TRANSIENT ACCOMMODATIONS TAX (GREAT-3(2))
The Maui Hotel & Lodging Association (MHLA) is the legislative arm of the visitor industry for Maui County. We represent over 180 property and allied business members and 22,000 employees. MHLA opposes Resolutions 23-171 and 23-174 supporting a State Bill relating to the County Transient Accommodations Tax.
MHLA is concerned that Maui County is considering lifting the cap on Maui County Transient Accommodation Tax. The County of Maui already has the authority to tax real property, and recently has been granted additional authority to levy surcharges on general excise and transient accommodation taxes. While we understand the frustration over the State not sharing State TAT revenues that the Counties help generate, the State currently does not have the authority to assess a surcharge to our real property taxes. With Maui County seeking additional tax revenue, it opens the possibility of the State again seeking an RPT surcharge. This continuous structure of dual taxation keeps increasing the cost of living for the residents and businesses of Hawaii.
We have already seen the ability of the State to keep increasing the TAT taxes and remove any nexus to the money collected. The beginnings of the Transient Accommodation Tax (TAT) go back to the summer of 1985 when the industry took it upon itself to introduce a measure that called for a hotel room tax with the proceeds of the tax earmarked for the building of a convention center and increased promotion of tourism. Hawaii State TAT is now at 10.25%, and in FY22 generated $830,056,000 , with the majority going into the State General Fund. [Please refer to the attached charts.]
The current Maui County surcharge at 3% is expected to generate $60,000,000 for FY24. MHLA is hopeful there will be a clear nexus on using the funds, with some used for destination management and regulation of illegal vacation rentals.
Our residents continue to ask visitors to pay more taxes without realizing the current taxes that are collected. Most residents don’t know of the millions collected and what those funds have been used for. At the same time, tourism leaders are frustrated that tax revenue generated by the industry is channeled into general funds, and then spent without mentioning where the money came from. MHLA believes residents would have better attitudes about tourism if they knew how State and Counties hotel room tax revenue would be spent. For FY22, that was almost one billion dollars.
In closing, this proposed legislation leaves an open-ended source of taxes without first looking for ways to use the current income streams the visitor industry provides.
Thank you for the opportunity to provide this testimony.
Lisa H. Paulson
Executive Director
Maui Hotel and Lodging Association
RE: Testimony Concerning GREAT 3(2) and 4(2), Relating to County Transient Accommodations Tax
Aloha Committee Chair U’u-Hodgins and Committee Members,
I am submitting this testimony on behalf of the REALTORS Association of Maui (“RAM”) in my capacity as their Government Affairs Director. Though we recognize the positive intent behind the bill, and the need to address the impacts of over tourism, RAM respectfully urges the committee not to pursue inclusion of these bills in the HSAC legislative package. Specifically, we have concerns over normalizing the trend of dual taxation at both the state and county levels, and we fear this proposal will invite another attempt by the state to exercise taxing authority over real property again. Moreover, we have concerns over the propriety and wisdom of granting the counties unfettered authority to tax transient accommodations at this time.
The State of Hawaii has established some fairly clear boundaries when it comes to the authority to tax residents. For instance, it had long been accepted that the counties have the authority to levy taxes against real property, and the state has the authority to levy general excise
and transient accommodations taxes. However, in recent years, the state has created processes for the counties to implement additional surcharges on general excise and transient accommodations. Those are ostensibly temporary and come with clear limitations, but they still represent dual levels of taxation for the same things. Some in state government had concerns with allowing Maui County levy those additional taxes, as Maui County is known to be reluctant to use the taxing authority it already has on real property, but the authority to levy additional taxes was still granted.
This erosion of the boundaries in taxing authority almost cut the other way in 2018, when a constitutional amendment was proposed on Hawaii ballots, which sought to allow the State of Hawaii to impose an additional surcharge on property taxes to go towards education. Though a noble cause, RAM opposed that constitutional amendment, and we were joined by a majority of Hawaii voters, because it was inappropriate for the state to seek taxing authority that was clearly reserved for the counties. We recognized then what we recognize now: as the boundaries between taxing authority keep getting blurred, the cost of living just keeps increasing for the residents and businesses of Hawaii, and the problems that spurred the taxes still aren’t getting solved.
The people of Maui are tired of this ever increasing trend of overlapping taxation, and it should not be normalized and extended any further. The County of Maui already has the authority to tax real property, and it has already been granted additional authority to levy surcharges on general excise and transient accommodation taxes. The county budget keeps going up, along with county revenue, and tourism numbers are in decline from 2019 pre-pandemic levels. When will enough be enough, and what is the ultimate goal? What has the County of Maui been doing to address the impacts of over tourism with the revenue it has already brought in with the TAT surcharge, and how will a limitless TAT change those efforts? Similarly, what efforts have been made towards economic diversification as a means of reducing our reliance on tourism?
Taxes are not solutions, but a means of funding solutions. Before the counties seek unfettered authority to tax that which is already being taxed by both the State of Hawaii and the counties, there should be a clear explanation of what is currently being done with taxpayer dollars to address the negative impacts of over tourism, and how more taxing authority is intended to benefit the people of Maui Nui.
As always, we are grateful for the opportunity to provide input on the legislative process, and we are happy to provide additional information on any of our comments as you may desire. Please feel free to contact me with any questions by email at jason@ramaui.com, or by phone at (808)243-8585.
Mahalo,
Jason A. Economou
Government Affairs Director
REALTORS Association of Maui
Please see attached testimony.
RE: Opposition for Resolution 23-171 and 23-174
The Maui Hotel & Lodging Association (MHLA) is the legislative arm of the visitor industry for Maui County. We represent over 180 property and allied business members and 22,000 employees. MHLA opposes Resolutions 23-171 and 23-174 supporting a State Bill relating to the County Transient Accommodations Tax.
MHLA is concerned that Maui County is considering lifting the cap on Maui County Transient Accommodation Tax. The County of Maui already has the authority to tax real property, and recently has been granted additional authority to levy surcharges on general excise and transient accommodation taxes. While we understand the frustration over the State not sharing State TAT revenues that the Counties help generate, the State currently does not have the authority to assess a surcharge to our real property taxes. With Maui County seeking additional tax revenue, it opens the possibility of the State again seeking an RPT surcharge. This continuous structure of dual taxation keeps increasing the cost of living for the residents and businesses of Hawaii.
We have already seen the ability of the State to keep increasing the TAT taxes and remove any nexus to the money collected. The beginnings of the Transient Accommodation Tax (TAT) go back to the summer of 1985 when the industry took it upon itself to introduce a measure that called for a hotel room tax with the proceeds of the tax earmarked for the building of a convention center and increased promotion of tourism. Hawaii State TAT is now at 10.25%, and in FY22 generated $830,056,000 , with the majority going into the State General Fund. [Please refer to the attached charts.]
The current Maui County surcharge at 3% is expected to generate $60,000,000 for FY24. MHLA is hopeful there will be a clear nexus on using the funds, with some used for destination management and regulation of illegal vacation rentals.
Our residents continue to ask visitors to pay more taxes without realizing the current taxes that are collected. Most residents don’t know of the millions collected and what those funds have been used for. At the same time, tourism leaders are frustrated that tax revenue generated by the industry is channeled into general funds, and then spent without mentioning where the money came from. MHLA believes residents would have better attitudes about tourism if they knew how State and Counties hotel room tax revenue would be spent. For FY22, that was almost one billion dollars.
In closing, this proposed legislation leaves an open-ended source of taxes without first looking for ways to use the current income streams the visitor industry provides.
Thank you for the opportunity to provide this testimony.
Lisa H. Paulson
Executive Director
Maui Hotel and Lodging Association
RE: Testimony Concerning GREAT 3(2) and 4(2), Relating to County Transient Accommodations Tax
Aloha Committee Chair U’u-Hodgins and Committee Members,
I am submitting this testimony on behalf of the REALTORS Association of Maui (“RAM”) in my capacity as their Government Affairs Director. Though we recognize the positive intent behind the bill, and the need to address the impacts of over tourism, RAM respectfully urges the committee not to pursue inclusion of these bills in the HSAC legislative package. Specifically, we have concerns over normalizing the trend of dual taxation at both the state and county levels, and we fear this proposal will invite another attempt by the state to exercise taxing authority over real property again. Moreover, we have concerns over the propriety and wisdom of granting the counties unfettered authority to tax transient accommodations at this time.
The State of Hawaii has established some fairly clear boundaries when it comes to the authority to tax residents. For instance, it had long been accepted that the counties have the authority to levy taxes against real property, and the state has the authority to levy general excise
and transient accommodations taxes. However, in recent years, the state has created processes for the counties to implement additional surcharges on general excise and transient accommodations. Those are ostensibly temporary and come with clear limitations, but they still represent dual levels of taxation for the same things. Some in state government had concerns with allowing Maui County levy those additional taxes, as Maui County is known to be reluctant to use the taxing authority it already has on real property, but the authority to levy additional taxes was still granted.
This erosion of the boundaries in taxing authority almost cut the other way in 2018, when a constitutional amendment was proposed on Hawaii ballots, which sought to allow the State of Hawaii to impose an additional surcharge on property taxes to go towards education. Though a noble cause, RAM opposed that constitutional amendment, and we were joined by a majority of Hawaii voters, because it was inappropriate for the state to seek taxing authority that was clearly reserved for the counties. We recognized then what we recognize now: as the boundaries between taxing authority keep getting blurred, the cost of living just keeps increasing for the residents and businesses of Hawaii, and the problems that spurred the taxes still aren’t getting solved.
The people of Maui are tired of this ever increasing trend of overlapping taxation, and it should not be normalized and extended any further. The County of Maui already has the authority to tax real property, and it has already been granted additional authority to levy surcharges on general excise and transient accommodation taxes. The county budget keeps going up, along with county revenue, and tourism numbers are in decline from 2019 pre-pandemic levels. When will enough be enough, and what is the ultimate goal? What has the County of Maui been doing to address the impacts of over tourism with the revenue it has already brought in with the TAT surcharge, and how will a limitless TAT change those efforts? Similarly, what efforts have been made towards economic diversification as a means of reducing our reliance on tourism?
Taxes are not solutions, but a means of funding solutions. Before the counties seek unfettered authority to tax that which is already being taxed by both the State of Hawaii and the counties, there should be a clear explanation of what is currently being done with taxpayer dollars to address the negative impacts of over tourism, and how more taxing authority is intended to benefit the people of Maui Nui.
As always, we are grateful for the opportunity to provide input on the legislative process, and we are happy to provide additional information on any of our comments as you may desire. Please feel free to contact me with any questions by email at jason@ramaui.com, or by phone at (808)243-8585.
Mahalo,
Jason A. Economou
Government Affairs Director
REALTORS Association of Maui
The monies through this measure should also be earmarked to help provide adequate medical facilities for communities that are underserved.
Aloha! My testimony in support of revoking all commercial permits for hydrofoils is attached.