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Honolulu City Council took the first step on Wednesday to introduce a city visitor tax.
Law 40 would impose a 3% city lodging tax on visitor accommodation. It would be levied in addition to the current state tourist tax of 10.25%.
The Legislature this year ended a state tax division that gave counties a total of about $ 130 million annually, with Honolulu County receiving 44% or about $ 45 million. The measure passed by the legislature enables counties to recoup funds through the introduction of their own Temporary Accommodation Tax (TAT).
Kauai and Maui counties have already decided to adopt the new tax authority, and both are expected to begin implementing a TAT on November 1st.
The Honolulu proposed TAT would impose a 3% tax on all gross rental income from facilities such as vacation rentals, hotels and timeshares. It would also apply to non-commissioned accommodation brokers, travel agencies and tour operators.
While Bill 40 provides specific allocations for the city’s TAT âârevenue, it doesn’t state how much would go to each proposed fund. A portion of the TAT revenue would go to the city’s general fund, while other portions would be reserved for mitigating the impact of tourism on public facilities and transport.
Andrew Kawano, head of the city’s budget and tax office, pointed out that there are two transit funds, one for the city and one for the Honolulu Authority for Rapid Transit. It wasn’t clear on the bill which transit fund would receive the revenue, he said. The bill points to the law that sets up the city’s transit fund, ROH 6-61.
“I think we will have to have more discussions in committee,” said Kawano. “Maybe make some technical changes to make it clearer what the intention is.”
Mayor Rick Blangiardi spoke out in favor of the proposed tax but did not speak out in favor of using funds for the city’s railroad project.
“I am supporting a city version of the TAT to restore a lost revenue base – so that we can continue serving our people,” he said. âI am committed to a functioning rail project and offer our communities an extended transit service. However, if the numbers don’t make sense, then the strategy doesn’t make sense. At the moment we don’t have the numbers to discuss a specific allocation for the railway. “
The HART board of directors passed a resolution during a meeting in late September calling on the council to introduce a city visitor tax, with part of the TAT revenue being used for the rail project. But council member Heidi Tsuneyoshi resisted the language in the measure, which would direct the TAT proceeds to the financially weak project.
“Now we have a bill in front of us that will use the money that should help against the effects of the tourists to pay for the train,” she said. “I have serious concerns about this.”
Honolulu City Council voted 7-2 to move Bill 40 from first reading and to a committee hearing. Tsuneyoshi and Councilor Augie Tulba cast the no-votes.
Councilor Calvin Say suggested that a municipal TAT could serve as a way to offset the $ 45 million loss in government revenue that was added to the current budget. He added that it is difficult to balance the budget and that spending for the city is expected to increase.
“If neither of us want to take the 3% TAT, we don’t have to,” said Say. “But we will go back into budget next year to balance our budget.”
According to the calculations of the state, if Oahu were to introduce a city TAT, it would generate about $ 48 million in revenue. If Honolulu introduces its own TAT, it would be the only other source of income controlled by the city besides property tax.
According to the way state laws are now written, the counties are tasked with their TAT survey. However, the council passed a resolution in support of state legislation that would allow the state to raise the Honolulu County’s TAT ââand distribute the funds to the city.
In another measure, the council selected Arushi Kumar as the city’s auditor. She takes on the role of Acting City Auditor Troy Shimasaki, who has held this office since 2019.
The council voted 7-1 to approve Kumar, who currently works as a fiscal and political analyst for the city of Seattle’s budget office. Kumar holds a master’s degree in public policy and a bachelor’s degree in economics. Before that, she also worked in the US Government Accountability Office.
Councilor Fukunaga voted against the nomination, citing a lack of experience and lack of authorization (Certified Treasury Professional Associate Designation), which she believed was a factor in Shimasaki’s tenure. Councilor Andria Tupola also encouraged Kumar to secure certification but supported the nomination.
Kumar said, “I understand that the specific problems of Honolulu may differ in detail from the specific problems of Seattle.” She added, “But I think the lessons I learned on those occasions ultimately got me Given skills that I can bring to Honolulu and help taxpayers. “
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