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Counties to receive larger share of hotel tax


The state Legislature passed out on final reading a bill that will increase the counties’ share of the transient accommodation tax (TAT).

The measure will now go to the governor for further consider. The governor can sign, veto or let the bill become law without his signature.

The Legislature believes that increasing the maximum amount of TAT revenues to the counties will allow them to better provide for public safety, parks, road maintenance and visitor-related services

House Bill 1671 will give the counties a combined $103 million per year for the next two years of the TAT revenues. The counties currently get a combined $93 million.

In 2010, during the economic downfall and facing a budget deficit, the state placed a cap on the counties’ share of the TAT.

Despite a perceived $844 million surplus, the Council on Revenues mid-session lowered tax revenue growth from 3.3 percent to zero percent in 2014 and from 7.4 percent to 5.5 percent in 2015, amounting to more than half a million dollars less than expected.

This session, the Legislature increased TAT revenues for two years, but found it prudent to require a study to determine the appropriate division of duties and responsibilities to provide public services before establishing a firm TAT distribution amounts.

“These funds will provide extra support and funds for all counties in our state,” said Sen. Gilbert Kahele (District 1 – Hilo), chair of the Senate Committee on Tourism.

“With more than a million visitors each year, tourism plays a key role in how we care for our infrastructure. County services, facilities and infrastructure directly affect the visitor experience,and the funds for the counties will be used to ensure that our tourism industry is maintained and remains high quality,” he said.

“Tourism remains one of our state’s top industries and TAT revenue helps to fund activities to keep our state’s economy strong,” said Sen. David Ige (District 16 – Pearl City, Momilani, Pearlridge, Aiea, Royal Summit, Aiea Heights, Newtown, Waimalu, Halawa, Pearl Harbor), chair of the Ways and Means Committee. “Although revenue projections were lower than expected, an increase in the cap on TAT revenues shared with the counties will allow them to improve services that support the state’s economy overall. Obviously we would have wanted to do more for the counties, but given our financial constraints, we had to balance the needs and concerns of all aspects of our communities.”

The transient accommodations tax is a tax that applies to certain rental activity in Hawaii.

The tax is levied on gross income and is imposed only on gross rental income when renting in transient accommodations. A transient accommodation applies to a hotel room or suite, apartment, condominium, house, beach house, or similar living accommodation which is rented for less than 180-consecutive days by and regularly furnished to a transient (a person has a permanent place to live elsewhere.)

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