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Honolulu will implement a city hotel tax. Mayor Rick Blangiardi signed the measure into law this afternoon.
Most of the revenue from the new tax will be allocated to the city’s general fund and rail. A smaller portion will go into a special fund to support natural resources impacted by tourism such as parks and beaches.
Bill 40 would levy a 3% city transient accommodations tax on visitor accommodations. It would be imposed in addition to the state’s current 10.25% hotel tax.
About 58% of the revenue from the new tax will go to the general fund, about 33% will go to rail and about 8% will go to the special fund for natural resources.
After the first two years, the breakdown changes to about 42% of the new TAT going to the general fund and 50% going to rail. The amount that would go to natural resources will stay consistent.
The Legislature this year ended a sharing portion of the state tax through which counties received a total of about $130 million annually, with Honolulu County receiving 44%, or about $45 million. The measure passed by lawmakers allows counties to recoup funds by implementing their own transient accommodations tax, or TAT.
Honolulu’s proposed TAT would put a 3% tax on all gross rental proceeds from establishments such as vacation rentals, hotels and time shares. It would also apply to non-commissioned accommodation brokers, travel agencies and tour packagers.
Oahu is the last county in the state to pass its own TAT.
“Bill 40 restores much-needed revenue and is expected to generate new funding to maintain core city services that will benefit our communities,” said Blangiardi. “We sincerely thank the Honolulu City Council for its support in passing this important bill which will help fund vital city functions, including police and fire protection, facility and infrastructure maintenance, improvements to parks, beaches, and roads, and the rail project.”
The Honolulu City Council passed the measure in a 6-3 vote earlier this month with Council members Heidi Tsuneyoshi, Augie Tulba and Carol Fukunaga voting against it due to the portion of the new TAT being funneled to the rail project.
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