Waikiki hotel and resort officials say they oppose the idea that their tax rate will rise next year when rates for most other property owners will not.
Already paying $12.40 for each $1,000 of assessed value, higher than other tax classifications, hotel and resort owners warned Honolulu City Council members Wednesday that raising the rate by $1 to $13.40 per $1,000 would result in higher taxes they will need to pass on to customers.
Brandon Barbour, government and community affairs director for the Hawai‘i Lodging and Tourism Association, said hotels and resorts account for 4.3 percent of Oahu’s total property value but that the tax class accounts for more than 11 percent of property tax revenues.
Not only will the increased expense be passed on to consumers, the businesses will have "fewer resources available for wage increases and reinvestment to make our businesses more successful in an ever-increasingly competitive global marketplace," Barbour said.
He noted that visitor industry employees account for one-sixth of all workers and one-fifth of the private sector workforce.
An official with the American Resort Development Association’s Hawaii chapter, the time-share trade association, also testified against the measure.
Henry Perez, Hawaii chapter president, said it’s unfair that one class of property owners be saddled with an increase.
"Surely, if additional tax revenues are needed, all taxpayers should be fairly assessed," he said.
Max Sword, Outrigger Hotels and Resorts vice president for industry affairs, said that while occupancy and room rates have increased in the past two years, so too have the costs of doing business, from employee wages and health care benefits to electricity costs.
The increase was proposed by Mayor Kirk Caldwell in the budget he submitted to the Council in March. The Council gave Resolution 14-53 the first of two necessary approvals Wednesday.
A final vote takes place in June. City budget officials estimate the $1 increase will result in about $8 million more in revenues for the city.
The resolution also calls for increasing the tax rate on owners in the new "Residential A" category, made up of residential property owners with homes valued at $1 million or more and additionally are not eligible for a homeowner’s exemption, to $5.50 per $1,000 from $3.50 per $1,000. That increase is expected to net about $26 million more for city coffers.
The Council also passed out on the second of three required readings:
» Bill 12 — a $2.15 billion city operating budget, roughly $13 million less than the one submitted by Caldwell.
» Bill 13 — a $655 million capital improvements budget, about $15 million more than Caldwell’s submittal.
