Hawaii Governor intends to veto resort tax bill

Some members of the state’s visitor industry are applauding Gov. David Ige’s decision to place a bill that would have increased visitor taxes on his intent-to-veto list.

Ige notified legislative leaders and key lawmakers Monday of his intent to veto Senate Bill 2699, which would have made resort fees subject to the transient accommodations tax (TAT).

Ige said the measure “creates an extensive and ambiguous expansion of the TAT. The vague language could subject restaurants, spas, and other businesses located in hotels to add the TAT to their services.”

Historically, TAT, which is in addition to the state’s general excise tax, has been levied solely on hotel, resort and timeshare industry rooms. But this past session, state lawmakers passed Senate Bill 2699, which could apply TAT to virtually any lodging business transactions, from resort fees and parking to food and beverage orders, activities, spa appointments, banquet serv­ices or the like.

Ige said, “The additional taxes imposed by this measure would result in significant increases in accommodation costs for our residents and visitors staying in Hawaii hotel properties.”

Ige has until July 10 to make a decision on the measure. After that date any measure that the governor has not signed or not vetoed will become law without his signature.

Supporters said the bill would beef up resources by adding a minimum of $11 million in revenue to the state budget.

Mufi Hannemann, president and CEO of the Hawaii Lodging &Tourism Association, said he hopes the bill does not become law.

Hannemann said the bill could reduce the number of tourists at a time when lava-related downturns are beginning to emerge. If the bill moved forward, Hannemann also said that it could widen the tax gap between what alternative accommodations and other lodging properties are required to pay.

The Waikiki Improvement Association and Unite Here Local 5, the hotel workers union, also criticized the bill’s “ambiguous language,” which they said could have unintended negative consequences.

Marriott and Hilton hotels in Hawaii were some of the larger hotel companies that spoke out against SB 2699, which they said would deviate from standard industry practices.

Harris Chan, area vice president of Hawaii and French Polynesia for Marriott International Hotels, said, “We should not continuously milk the tourism industry. Applying TAT charges to all guest experiences in resorts will cause resistance from the travel consumers overall; and make the Hawaii total costs as a destination out of reach for many tourists.”