Hawaii lawmakers prepare to raise hotel taxes to pay for state rail project

Hawaii is preparing to up hotel taxes across the state in a bid to cover costs for its rail transit project.

Leaders of Hawaii’s House and Senate agreed to a last-minute proposal at the tail end of April, approving a new bill that would raise transient accommodation taxes paid by visitors to the state from 9.25 percent to 12 percent. The increase will last for 10 years. Hawaii lawmakers expect this increase in hotel taxes will raise $1.3 billion for the state by 2027. The bill is set to go before Hawaii’s full House and Senate this week, and it is expected to win approval.

George Szigeti, president and CEO of the Hawaii Tourism Authority, cautioned lawmakers against going too far with tourism taxes, saying in a statement that lawmakers “need to be careful about increasing the cost for visitors to vacation in Hawaii and not price ourselves out of the global marketplace.”

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It isn’t hard to see why Hawaii is looking to tourism to drum up money for its transportation budget. Cost estimates for the state’s rail project rose from $5 billion in 2014 to nearly $10 billion this year. 

According to a report released by the Hawaii Tourism Authority, a total of 8,941,394 visitors came to Hawaii in 2016, a 3-percent increase over 2015. A forecast released by Hawaii’s Department of Business, Economic Development & Tourism expects the first quarter of 2017 to result in a 1.5-percent increased in visitor arrivals over 2016, though this is 0.3-percent under what was previously expected. Currently, the DBEDT expects Hawaii to see a 2.9-percent increase in visitor expenditure growth over 2016.

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