Column: Increase tax on hotels, not residences

On June 5, this Wednesday, the Honolulu City Council will consider the fiscal year 2020 budget for a final vote. No one wants to raise taxes or fees, but the proposed budget includes revenue measures based on the fact that the city has rising nondiscretionary obligations to pay, as well as future rail operations and maintenance costs.

One revenue measure is a proposed $1 increase per $1,000 in assessed value, in the real property tax rate for hotel and resort properties. This $1 increase is being met with strong opposition by the hotel industry that objects to being singled out while residential and commercial property rates remain level.

While I appreciate the importance of the visitor industry to our economy, there are compelling reasons for my position. First, raising residential rates is a bad idea. Oahu residents are already saddled with high living costs with many struggling to make ends meet. We should do everything we can to shield them from additional tax burdens.

And raising commercial or industrial real property tax rates will directly impact our people because they will end up footing the bill every time they buy food and clothing, visit the doctor or fill up their gas tanks. Commercial and industrial property owners will pass taxes on to our consumers, the residents of Oahu.

Contrast that to the thriving hotel industry that can do what other premier visitor locations do, and that is to pass additional tax burdens to the millions of visitors that enjoy our island. Anyone who travels to other business or visitor destinations knows that Honolulu’s hotel related taxes and fees are not out of line.

Did you know that 21 of Oahu’s 25 largest hotels are owned by real estate investment trusts or off-shore corporations? And 18 of those same 25 largest hotels now charge guests hefty “resort fees” in addition to their room fee. Yet hotels here remain near full capacity levels as Honolulu not only has great cultural attractions and natural beauty, but is one of the safest large cities in the world.

We appreciate these visitors — however, they do create a heavy burden for all the residents of City and County of Honolulu. They enjoy our beaches and parks, they seek adventure on Oahu’s hiking trails, and they contribute to traffic and security needs in every neighborhood.

Visitors add to the cost of city government. We need more police, firefighters, ocean safety officers, emergency medical technicians, parks staff and others because the city serves these visitors as well as our residents. Shouldn’t the approximately 6 million visitors to our island of a little less than 1 million people be expected to pay for a fair and reasonable share of these services?

Please tell your City Council member that you support the $1 tax rate increase on hotel and resort property so that the financial burden does not shift more on to the backs of our residents.

Kirk Caldwell is mayor of the City & County of Honolulu.