Hawaii is raising taxes and fees, much of which disproportionately impacts visitors. Since the state has stated a desire to reduce Hawaii tourism, perhaps these plans are in perfect alignment with achieving the state’s goals.
London-based World Travel and Tourism Council, however, cautioned that high taxes on tourism could reduce tax revenues collected as it either deters travel to a destination or reduces the number of days visitors spend. In addition, they warned that high taxes on visitor accommodations and airfare can negatively impact highly desirable local spending. The State of Hawaii does not seem to be concerned about that.
Here are two examples of how some of those increases will happen and two different philosophies regarding implementation. One is immediate, and the other is to happen more incrementally.
It starts with Governor Josh Green suggesting two additional ways to raise funds to address climate change and fire mitigation. One would increase the accommodations tax rate by some percentage, while the other would see a $25 fee added to accommodations. There’s also the proposal for a $50 Green fee to start next January 1. Any, all, or none of these may be implemented, but it doesn’t stop there.
Hawaii car rental taxes to be increased incrementally.
Hawaii has a base tax on Hawaii car rentals of $5 a day. It’s on its way up to $8 per day, and that’s being accomplished by adding $.50 each year on January 1. That started in 2022 and will conclude in 2030.
It’s not about the small amount of increase but rather an interesting means to an end. By adding incremental amounts, Hawaii might achieve its goal of reduced tourism more slowly than, say, a sudden $50 climate impact fee. That could also help preserve tourism-related tax income, which is very much needed.
Hawaii car rental taxes and fees now total 15% + $12/day.
In addition to high base Hawaii car rental rates, there are the following additional mandatory fees and taxes. General excise tax (varies by island) up to 4.71%. State motor vehicle $6/day. Vehicle registration at $1.45/day. The customer facility charge is $4.50/day. Hawaii airport concession fee of 11.1%. By comparison, in California, the total state tax is 10.75%.
Hawaii also has the highest accommodation taxes in the US at 18%.
The state’s accommodation taxes are comprised of three parts. First is the base tax rate of 10.25%. That entire amount is going to the state and, since 2021, has not been shared with the counties. The counties then implemented their tax of 3%, which brings the total tax guests pay to 13.25%. That brought the accommodation tax up a whopping 29% in 2021. Those taxes are in addition to Hawaii’s 4.712% GST. Thus, the combined tax on hotels and vacation rentals is approximately 18%.
Visitors have already commented on how they feel about these tax increases.
“Today, I received an email from Costco Travel informing me that the Hawaii rental car surcharge tax has gone up 50 cents per day… this is on top of the other rental car taxes, hotel taxes, occupancy fees, and entrance fees….now add the impact fee. After our next trip in April, it will be very difficult to return. Hawaii will become the home of the billionaire elites and locals will be their serfs.”
Beat of Hawaii Reader, Allan.
Proposal to hike Hawaii vacation rental tax hike to 33% deferred.
Last year, House Bill 820 called for a combined tax rate of 33% on Hawaii vacation rentals. Fortunately, at least for now, that bill has been deferred. As with hotels, the combined tax on vacation rentals is approximately 18%. When the bill was proposed, one of the bill’s authors said:
“Transient vacation rentals continue to be a problem for the State as public discourse and perception have grown more critical of the increasing number of visitors and the impacts of over-tourism. Your Committee believes that the State needs to take a strong stance on holding the tourism industry accountable for the impacts on the State’s resources and residents, such as the lack of housing for residents, as many units that may have housed residents are instead used as transient vacation rentals. This measure will ensure that transient vacation rentals that host visitors for less than thirty days pay their share to address the impacts of the tourism industry on the State.”
Representative Sean Quinlan
On the other hand, the non-profit Hawaii Tax Foundation said, “This Bill violates the United States Constitution as well as the Hawaii State Constitution. It disenfranchises a certain category of taxpayer.” Others concurred that this was a discriminatory pro-hotel, anti-vacation rental proposal.
Where do you stand on more Hawaii visitor tax increases?
It is astounding the links Hawaii leaders will go to crush our economy. We have one business. Tourism. And they are doing everything to pretend that they can survive without tourism. Where will the jobs come from without tourism? They deserve what they get. Current Hawaii leaders do not want residents to be prosperous. They want to control us by introducing stupid legislation instead of solving real problems. People do not live here to be controlled. We live here to enjoy our life without corrupt leaders. But it is obvious that there are many corrupt leaders on the islands who want to put us out of business.
Sad because we come there every another year it mite be time to fine a new place.
Taxes are theft. No way around it .The way Hawaii robs its citizens and blatantly is defying the constitution by exstorting its visitors is a shame. This Governor Green sounds like a tyrant. Free market capitalism is the only way to find a fair way forward. Third parties calling them selves government officials with their hands in the cookie jar with the excuse the average person needs regulated and protected is the biggest crime ever. Them using the natural cycles of the planet and calling it Global boiling is just another tool to get the average person to live in fear and make easier to exstort more capital. All the while reducing freedom.
Free market capitalism has created the current situation
Actually, I wish that someone could define “free market capitalism”. It seems that since trickle-down economic theory, those with the capital have been free to take advantage of recessions, inflation and the boom years, sticking it to those with no other choice than to buy essentials at whatever rate the capitalists desire.
Come on people do you really think the government can run your life better than you? At every choice what we better in the long run. Buy a new car at high interest or pay now your mortgage? After 30 yrs you have equity not a rusty car. Would you prefer Cuba and China over USA? Instead of blaming the tourist sell them an icecream cone.
I loved Hawaii when my wife and I visited last year but other destinations may be calling. Why go if I’m not wanted.
Taxes are theft? I assume you will donate your social security checks as well as Medicare?
“The position that taxation is theft, and therefore immoral, is found in a number of political philosophies.” This is from the introduction to the Wikipedia article on “Taxation as Theft”.
Not all taxes are theft but there are many taxes, disguised as fines, that are theft.
Social Security and Medicare taxes are not theft but a very poor way of saving money for retirement and medical care.
First of all, SS and Medicare are federal taxes and not local, so there’s that fact. Pretty sure the point the person was trying to make is that adding taxes on top of taxes gets to be a large burden which often doesn’t achieve the goals intended. In fact, it may actually result in the complete opposite. The economics of HI travel is pretty simple. There is an amount people are willing to pay to participate in something. If it gets too expensive, the math doesn’t work out so they don’t visit. HI government officials are not, by definition, leaders. Adding too many fees to make travel to HI less attractive is bad for the residents.