City council approves new 3% hotel tax, up to half going to Honolulu railroad project


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Honolulu City Council on Wednesday approved a new 3% tax on temporary housing that will use one-third to one-half of the proceeds for the city’s railroad project.

The bill has yet to be signed by Mayor Rick Blangiardi. His government has spoken out in favor of the measure. If approved, it will take effect immediately.

Earlier this year, the State of Hawaii Legislature voted to withdraw the counties’ state transitional tax (TAT) revenue. However, the legislature allowed the counties to levy their own TAT of up to 3% – in addition to the state’s existing 10.25% hotel room tax.

Maui and Kaua’i counties have already waived their respective visitor taxes and have begun collecting them. Honolulu‘s efforts were hampered by discussions about whether some of the money should go to the ailing railroad project.

But on Wednesday Invoice 40 passed its third and final reading with 6: 3 votes. Council members Carol Fukunaga, Heidi Tsuneyoshi and Augie Tulba voted against.

The bill provides 1% of TAT for the Honolulu rail for the first two years and 1.5% thereafter – that’s half of the TAT fund.

The remainder goes to the city’s general fund, with part being used to “mitigate visitor impacts on public facilities and natural resources, including the restoration, operation and maintenance of beaches and parks”.

Councilor Tsuneyoshi was disappointed that all of the money would not go to the general fund.

“We very likely want to enter this budget season with a deficit at a time when we might just be looking. We have an extra 3% to work on our city parks like we’ve always wanted to do, we can fund our ocean safety officers, we can finance our HPD. This could be such a transformative day for our city, “said Tsuneyoshi.

No matter how much money the state raised, Honolulu’s stake in TAT was previously capped at $ 45 million.

Councilor Andria Tupola said she welcomed the change.

“I think this division of us, the separation from the state, is super important because of the effects of tourism, because we don’t have to go and beg for the money, sometimes get it, sometimes not get it.” said Tupola.

Two additional amendments were tabled at the meeting.

Councilor Calvin Say’s amendment clarified the electronic tax return requirements required by the Administration Bureau. The change was approved unanimously.

A second change by Councilor Tsuneyoshi would have canceled the Honolulu rail assignment. It was not adopted.

The new estimated cost of rail to reach Ala Moana is $ 11.4 billion, said Lori Kahikina, interim general manager and CEO of the Honolulu Authority for Rapid Transportation.

HART officials say the budget gap for rail transport is estimated at just under $ 2 billion, following a preliminary independent review.

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