Rail finance, real estate tax increase weighted by Honolulu City Council in new tax law

HONOLULU (KHON2) – A bill for taxing visitors to Oahu leads the Honolulu City Council. The 3% tax will help fill the county funds after the state lost about $ 45 million.

For years the Transient Accommodation Tax (TAT) was developed to help with the tourism impact on the Hawaiian Islands as it was collected by the state and distributed to the counties. Now a new state law allows counties to collect a maximum of 3% on their own, but some councilors fear the money will be used for the Honolulu railroad project.

Under Bill 40, Honolulu could raise up to $ 7 million a month.

“We have to fill that $ 45 million puka and that’s the first thing the bill does,” said Tommy Waters, Honolulu City Council chairman and chairman.

This money is split between:

• Support for parks and natural areas
• General fund for things like police, fire brigade and rescue costs
• The Honolulu Railroad Project

“Now we have a bill in front of us that would use the money that should help against the effects of the tourists to pay for the train,” said Honolulu City Councilor Heidi Tsuneyoshi.

The amount of income that would accrue to each has yet to be determined. Some councilors warn of another option to compensate for the lost $ 45 million – an increase in property taxes.

“If no action is taken on that 3%, there is no 45 million, then we can cut the budget,” said Calvin Say, Honolulu city council member. “Let’s be honest with ourselves, I’ve said publicly to all of us in this chamber. We do not agree to increase the property taxes of our residents. “

Honolulu Mayor Rick Blangiardi fully supports the bill but does not yet know how much revenue will be used for the railroad.

“Obviously, I have absolutely no qualms about allocating the rest of these resources. We’ll see what it is as soon as we can get into the details of offsetting rail costs, ”Mayor Blangiardi said.

As the economy continues to recover from the COVID pandemic, some industry experts have warned against putting a tax on Hawaii’s economic engine.

“It’s an unfortunate time for any type of tax hike in an industry in trouble,” said Mufi Hannemann, president and CEO of Hawaii Lodging and Tourism. “We hope that the majority, if not all, of these funds will be used for tourism-specific projects and initiatives.”

There is another belief that tourists will continue to pay to get to the islands even if 3% is added on top of the state’s 10.25% TAT.

“We are a premium destination and we can charge a premium price and tourists are ready to come as long as we continue to offer this product and the beaches are clean,” said University of Hawaii at Manoa Travel Industry Management. Jerry Agrusa.

Some council members also suggested that the tax be waived on Kama’aina, which they will discuss in future committee meetings and readings. The bill was passed in first reading on Wednesday 6 October.