New tax could make your next Hawaii trip even more expensive

Jul 12, 2021

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Visitors to Hawaii can expect to see an additional 3% tax added to their bills for hotel and short-term stays, the Associated Press reported last week.

The Maui County City Council is working to implement the new tax after the Hawaii Legislature overrode Gov. David Ige’s July 6 veto of HB862, which would authorize Hawaiian counties to establish and collect a 3% county transient accommodations tax; eliminate $103 million in hotel room tax revenue to Kauai, Hawaii and Maui counties, along with the city of Honolulu; and replace the source of the Hawaii Tourism Authority’s (HTA) budget.

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Maui County Council Chair Alice Lee told Hawaii News Now that the bill would “nearly triple revenue” from Maui tourism to approximately “$50 to $70 million.”

Despite support by the state Legislature and Maui City Council, not all local officials were in favor of the bill.

“I am very concerned that the funding and functional changes in this bill will severely damage HTA’s shift to destination management,” Ige said in a press statement. “We need to find ways to mitigate the impact of visitors on our islands, and this bill would make it impossible for the HTA to strike a more sustainable balance in our communities.” The American Hotel and Lodging Association echoed the governor’s concerns.

Related: Hawaii expands Clear partnership, expedites entry with digital COVID-19 vaccination checks

The bill was also met with mixed support by Maui County Mayor Michael Victorino.

“The Legislature’s action didn’t surprise me. It’s a mix of bad news and good news. The bad news is the immediate reduction in the County’s share of the revenue from state Transient Accommodations Tax,” he said in a press statement on July 6. “The good news is we anticipated this would happen, so it will not have an impact in the FY [fiscal year] 2022 budget.”

The transient accommodations tax refers to the 10% state hotel room tax, which is distributed based on population to individual counties. The new law will “allow counties to levy their own surcharge to the tax” and pocket the extra money, per Hawaii News Now.

Read more: Big milestone in Hawaii reopening; As of today, pre-testing and quarantine no longer required for the fully vaccinated

Featured photo of Maui, Hawaii by Clint Henderson/The Points Guy.

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