Tuesday, February 27, 2024
Hawai'i Free Press

Current Articles | Archives

Sunday, May 2, 2021
Counties, the TAT Is Now Your Problem Too!
By Tom Yamachika @ 6:00 AM :: 2314 Views :: Taxes, Tourism

Counties, the TAT Is Now Your Problem Too!

by Tom Yamachika, President, Tax Foundation Hawaii

For many years, the counties and the State have been bickering about how much support from the State’s transient accommodations tax (TAT) they should get to help fund county infrastructure. County systems like fire, police, and parks maintenance undeniably help tourists too, and the argument was that the tourist tax should help the counties out.

In 2009, for example, the law provided that 44.8% of the tax, after satisfying earmarks, would be distributed to the counties using specific percentages. That was when the TAT rate was 7.25%. The rate crept up to 9.25% in 2013, but the percentage was changed to a fixed dollar amount.

The counties complained about their allocations, and in the following year the Legislature had a state-county functions working group recommend an appropriate allocation of TAT revenues. The working group recommended to the 2015 legislature that the percentage allocation of the TAT be restored, but the legislature balked. The fixed amount allocated to the counties went up and down slightly over the years and is now at $103 million while the TAT rate is 10.25%.

When the COVID-19 pandemic hit, Governor Ige, in a questionable use of his emergency powers, completely shut off distribution of TAT money to the counties. But it’s not like that much money was being saved by that move, because TAT collections had fallen through the floor. According to a “Preliminary Comparative Statement of State General Fund Tax Revenues” for March 2021, TAT revenues for fiscal 2021 (July 2020 to March 2021) are down more than 80% compared to the comparable period for fiscal 2020.

In the conference draft of House Bill 862, the allocation of TAT funds to the counties will be eliminated entirely and permanently, but the counties will be given authority to adopt by ordinance a TAT surcharge, up to 3%. House Finance Chair Sylvia Luke said that would “incentivize counties to hold B&Bs accountable, and enforce B&B” ordinances, and it “also provides the counties another taxing authority other than just property tax and some of the motor vehicle fees.”

This is a tax increase. The State is proposing to scoop up the $103 million it previously shared with the counties and keep it all. The counties, just to keep up, would need to enact additional taxes, perhaps on visitor accommodations or on real property.

In either case, a tax increase on the visitor industry may amount to kicking that industry when it’s down. As mentioned earlier, TAT revenues are down 80%. Businesses in that industry weren’t simply toying with the idea of furloughs; they already have experienced layoffs and business closures. State unemployment reached almost 24% just one year ago. As stated by HLTA President Mufi Hannemann in testimony on House Bill 321 which contains provisions that would move to House Bill 862, “now is not the time to place additional cost burdens on local businesses. Everybody is desperately working to recover an economy that has been disproportionately affected by the COVID-19 pandemic, and we should be looking to support these businesses rather than saddling them with additional costs.”

The counties, not surprisingly, don’t want to be a part of this increase either. The Hawaii State Association of Counties, and some individual counties, testified against House Bill 321. Maui Mayor Victorino wrote: Since the State and the counties serve the same constituents, it is important that we continue to work as partners in meeting the needs of our communities. As demand for services is ever increasing (and so is the cost of those services), it is equally important that revenue be appropriately shared so that the needs of our residents and visitors can be met to the best of our combined abilities.” That seems to be another way of saying, “Don’t make us do this. Both of us will get hurt.”

Now we wait to see if Governor Ige will go along with this.

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

Aloha Pregnancy Care Center

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Moms for Liberty

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT