Sides Brace For Tourism-Tax Vote
Hawaii: Biting the hand that feeds it
Tourism officials and the Lingle administration are turning up the heat today in the face of a critical legislative vote to raise the hotel room tax.
The House and Senate are expected to vote this afternoon on Senate Bill 1111, which would raise the state's 7.25 percent Transient Accommodations Tax 1 percentage point this year and an additional 2 percentage points next year to 10.25 percent.
The increase amounts to a 41.4 percent increase in the hotel room tax and is estimated to bring in $30 million in just the first year, according to legislators.
Linda Smith, senior policy adviser to Gov. Linda Lingle, said the hotel room tax increase would run counter to the state's tourism marketing campaign, and Lingle has told lawmakers she will veto the bill.
"We are working with the travel industry and have been diligent in contacting members of the House and Senate. We are talking with neighbor island legislators — that is where we believe we can get the most understanding," Smith said.
The bill has become a partisan battleground, with Democrats saying it is the only way to save the state's floundering budget, and Republicans, including Lingle, saying the bill will hurt tourism.
Lingle and her staff have been working to coordinate a telephone and e-mail campaign targeting neighbor island legislators because unemployment on the neighbor islands is above 10 percent.
"If you ever thought about calling your legislator, now would be a really good time," Lingle said yesterday afternoon during a call-in radio program.
Keith Vieira, senior vice president and director of operations for Starwood Hotels and Resorts, said a hotel room tax could not come at a worse time because the national recession is causing tourists to rethink trips to Hawaii.
Hawaii, Vieira said, is a leisure destination with little business travel, so visitors can either come to Hawaii or go someplace else.
"We are stressing that Hawaii wants you. Come visit Hawaii. It is a great place and a great value. And that message is better served by not raising taxes," Vieira said.
Sen. Donna Mercado Kim, chairwoman of the Senate Ways and Means Committee, said the travel industry has always fought the hotel room tax but that something needs to be done to help balance the budget.
"I know every time they say tourists are not going to come, tourists continued to come," Kim (D, Kalihi Valley-Halawa) said.
Vieira said that while he thinks Hawaii's tourism-dependent economy will improve, "let's not make the rebound any more difficult."
Kim and Senate President Colleen Hanabusa (D, Nanakuli-Makua) said raising the tax on tourists makes more sense because it is not directly paid by local residents.
Comments
The real Boston Tea Party...Taxition without Representation!!! This time in the Land of Aloha. Wrong time...wrong place. This hotel tax increase will have a negative affect on Hawaii's tourism. With the worldwide economy in decline this is not the time to increase the visitors costs, instead you need to maintain their favorable desire to visit your destination and continue to give you guest a reason to spend their money in Hawaii. With bad times the world economy is, going through this tax increase will only lead to a continuing decline and a longer recovery period. If visitor arrivals continue to decline, the overall net tax income to the State will not increase with higher hotel taxes. Most likely this tax will have the immediate affect of less revenues, not increased. If this tax chases away your tourists, the missing expenditures on other goods and services, lost of jobs, not just in hotels but other parts of the service industry, even a decline in the States' current hotel tax revenues, and other forms of revenues that Hawaii directly derives through tourism. The type of people that visit Hawaii are concerned about their own local City, State and Federal tax increases and many are in a boycotting mood as recently observed with the April 15 protests. This tax at this time ... will backfire on Hawaii. I am sure there are other means for the State of Hawaii to meet their revenue goals through other forms of revenue enhancement without being so obvious your desire to "Bite the Hand that Feeds you"
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