Hawaii has increased taxes and fees, many of which disproportionately impact tourists. The state has said it wants to reduce tourism to Hawaii, so perhaps these plans are perfectly consistent with achieving the state’s goals.
London based World Travel and Tourism CouncilHowever, it warned that high taxes on tourism could reduce tax revenue collected by discouraging travel to destinations or reducing visitors’ length of stay. Additionally, it warned that high taxes on visitor accommodation and airfares could have a negative impact on highly desirable local spending. Hawaii doesn’t seem concerned about that.
Here we present two examples of how these increases occur and two different philosophies for implementation. One is immediate and the other is more gradual.
It begins with Gov. Josh Green proposing two additional ways to raise funds to address climate change and fire mitigation. One proposal would increase the lodging tax rate by a percentage, and the other would impose a $25 surcharge on room rates. There is also a proposal that he would start a $50 green fee from January 1 next year. Any, all, or none of these may be implemented, but that’s not all.
Hawaii’s rental car tax will be raised in stages.
Hawaii imposes a basic tax of $5 per day on Hawaii rental cars. It is currently increased to $8 per day, which is achieved by adding $0.50 to him on January 1st of each year. This he plans to start in 2022 and finish in 2030.
This is more than a marginal increase; it’s an interesting means to an end. Gradually adding the amount could make Hawaii reach its goal of reducing tourism more slowly than, say, by suddenly imposing a $50 climate impact fee. It could also help preserve much-needed tourism-related tax revenue.
Taxes and fees for rental cars in Hawaii total 15% + $12 per day.
On top of Hawaii’s high base car rental rates, there are additional mandatory fees and taxes: General sales tax (varies by island) up to 4.71%. $6 per day for motor vehicles in the state. Vehicle registration is $1.45 per day. Customer facility fee is $4.50 per day. The concession fee for Hawaii airports is 11.1%. By comparison, California’s total state tax is 10.75%.
Hawaii’s lodging tax is also the highest in the United States. At 18%.
The state lodging tax consists of three parts. First of all, the basic tax rate is 10.25%. This entire amount goes to the state and will not be shared with counties after 2021. Then the county introduced a 3% tax, bringing the total tax paid by guests to 13.25%. This increased lodging taxes by a whopping 29% in 2021. These taxes are in addition to Hawaii’s 4.712% his/her GST. Therefore, the total tax for hotels and vacation rentals is approximately 18%.
Visitors are already commenting on how they feel about these tax increases.
“Today, I received an email from Costco Travel informing me that the surcharge for rental cars in Hawaii has increased by 50 cents per day…this is in addition to other rental car taxes, hotel taxes, occupancy fees, and admission fees. …Add impact fees now. After the next trip in April, it will be very difficult to return. Hawaii will become the home of the billionaire elite and the locals will be their serfs. .”
Beat by Hawaiian reader Alan.
A proposal to raise Hawaii’s vacation rental tax to 33% will be postponed.
last year, House Bill 820 Required a comprehensive tax rate of 33% for vacation rentals in Hawaii. Fortunately, that bill has been held up, at least for now. As with hotels, the total tax on vacation rentals is approximately 18%. When this bill was proposed, one of the bill’s authors said:
“Temporary vacation rentals continue to be an issue for the state as public discourse and perceptions of increasing tourist numbers and the effects of overtourism become more critical. Holding the tourism industry accountable for impacts on the state’s resources and population, such as the lack of housing for residents, as many units where residents may have lived are being used as temporary. We believe we need to take a strong stance on Vacation Rentals. This measure would reduce the burden on temporary vacation rentals that accept visitors for less than 30 days to address the impact of the tourism industry on the state. Guaranteed to pay.”
Representative Sean Quinlan
Meanwhile, the nonprofit Hawaii Tax Foundation said, “This bill violates the U.S. Constitution and the Hawaii State Constitution. It would disenfranchise certain categories of taxpayers.” Some agreed that the proposal was anti-vacation rentals.
What do you think about further increases in the Hawaii tourist tax?
