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Tourist Spending

Report ranks Honolulu tax burden for travelers lowest

Robbie Dingeman, Honolulu Advertiser  Aug 20, 2008

Honolulu got good marks for the low tax burden imposed on travelers, according to a recent study by the National Business Travel Association.

The study ranked 50 cities based on taxes for things like lodging, car rental and meals.

The cities with the lowest tax burden were Honolulu; Portland, Ore.; Fort Lauderdale, Fla.; Fort Myers, Fla.; and West Palm Beach, Fla. The cities ranked the highest were Chicago; Nashville, Tenn.; Charlotte, N.C.; Seattle; and Houston.

The report calculated the amount of taxes paid by travelers who stay at a hotel, rent a car and eat restaurant meals for one day and one night.

The report's authors said they used national average prices for the various categories to create an "apples-to-apples"comparison. They then applied local and state taxes to the pre-tax amounts to determine the tax burden.

For example, the study used a hotel rate of $103.70, the December 2007 U.S. average daily room rate as reported by Smith Travel Research. The average daily meal cost of $82.03 for travelers was calculated using data from sources that included Business Travel News and the National Restaurant Association. And researchers sampled car rental rates in 10 major cities in March 2008 to find an average $76.60 before taxes and fees.

But Lowell Kalapa, president of the independent tax research group Tax Foundation of Hawaii, said there's more to the tax picture than the study shows.

While the room tax in Hawai'i is a comparatively low 7.25 percent, hotels tack on another 4.5 percent in general excise tax, Kalapa said, which doesn't appear to be calculated in the study.

And when a traveler adds that to the already high hotel rates in Hawai'i, the overall pinch on a travelers wallet will be felt more here than in some states, he said.

"This doesn't tell a complete story," Kalapa said.

While it's true that taxes are higher in other cities, Hawai'i ranks among the highest room rates in the nation, Kalapa said. "It makes a difference what the total rates are," he said.

The National Business Travel Association association hired American Economics Group Inc. to conduct the study.

The NBTA Foundation ‚ÄĒ the association's education and research foundation ‚ÄĒ arranged to have AEG collect and report detailed travel tax data on 50 US cities with the highest numbers of air passengers.

Report ranks Honolulu tax burden for travelers lowest
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