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Maui County Council passed a bill on Friday to create a new 3 percent tax on visitor accommodation in addition to the 10.25 percent already imposed by the state. The creation of the new tax, which will take effect on November 1, was spurred by the decision of the state legislature in the last session to remove the counties share of the TAT, which had historically been collected. with visitor accommodations across the state and divided among the four counties. – The Maui News / COLLEEN UECHI photo
With more time needed to prepare, especially for smaller homes, Maui County Council passed a new visitor accommodation tax on Friday, but delayed its passage until Nov. 1.
Originally, the county’s new 3% transitional accommodation tax was due to go into effect on Friday, when council was due to take its second and final vote to establish the law.
Earlier this year, leaders in the visitor industry urged the county to impose a 3% surtax, saying the properties were trying to recover from the pandemic. Most of the arguments on Friday, especially small dwellings, called for pushing back the implementation date.
“When you think of the TAT, you often think of the big resorts, but this tax would apply to all tourist accommodation, including the many vacation rentals and B & Bs we’ve heard about, as well as smaller hotels. as in Hana and Molokai, “ said President Keani Rawlins-Fernandez, whose budget committee has considered the bill.
“While I have no doubt that the large resorts that are members of the Maui Hotel and Lodging Association have been tracking this issue since its inception in the legislature, I am not sure that all accommodations, especially the smaller ones, have received prior notice. sufficient.”
She added that she got down “the shoes” people affected by the tax and that she would be quite upset if she was a hotel guest and asked to pay the new tax that had just been imposed on Friday.
If the tax is not collected from guests, then accommodation will have to absorb the costs, she added.
Council member Yuki Lei Sugimura also supported the postponement of the date to November 1. “Which would give people time to plan. “ She said members had heard from many small businesses that needed more time to implement the new law and, unlike larger businesses, didn’t have as many staff or accounting departments to help them.
“You have heard the voice of the people” Sugimura told Rawlins-Fernandez. “I think it allows companies to react more based on a company and not be like ‘crazy, on October 1 we are going to start, we are going to do it.’
With the adoption of the bill, a transitional accommodation tax of 3% is established on all gross rents, gross rental income and the market fair rental value considered as taxable under an article of the law. from Hawaii.
The board voted 7-0 to approve the measure with board members Tasha Kama and Kelly King absent and apologized.
Mayor Michael Victorino said at his press conference on Friday that he planned to sign the bill on Tuesday. He said the county did not want to have to enact the tax but was obligated to do so to help pay for visitor services.
Historically, the TAT was collected from hotels and other accommodations that house guests for less than 180 days and then distributed among counties and the state to fund things like state parks and the upkeep and marketing of amenities. trains for the Hawaii Tourism Authority, the remainder going to the general state fund.
However, in its last session, the state legislature removed the counties’ share of visitor accommodation taxes. In the past, Maui County’s annual share of the temporary accommodation tax was about $ 23.5 million out of the TAT 103 million distributed to counties.
As the legislature removed the TAT, it also allowed counties to establish their own surtax of up to 3 percent on top of the current 10.25 percent rate the state charges for visitor accommodation.
The legislature this year also changed the way the Hawaii Tourism Authority is funded.
Maui County’s revenue from its new tax for this year will go towards affordable housing, open spaces, cultural programs, and tourism management and enforcement, Rawlins-Fernandez said.
At the county press conference on Friday afternoon, she added that the county expects to generate around $ 15 million from the new tax in the current fiscal year.
In anticipation of the new tax, Rawlins-Fernandez said the council also passed a bill on first reading to increase revenue earmarked for the Fund for the Preservation of Open Spaces, Natural Resources, Cultural Resources and Views. panoramic; the Affordable Housing Fund; and the Revolving Fund for Economic and Cultural Development Programs.
Kauai County recently passed a bill to add its own 3% surtax to compensate for lost TAT.
The majority of people testifying on the TAT bill on Friday called for the collection period to be extended until January.
Angela Vento, general manager of Wailea Beach Resort, asked that the tax go into effect in December to allow for implementation and a chance to notify future visitors.
She added that the 550-employee station was just getting back on track by welcoming its staff again. While Wailea Beach Resort and other properties “Had a wonderful summer”, Occupancy at the 81 hotels in Maui County continues to lag behind 2019, said Vento, who is also the new president of the Maui Hotel and Lodging Association.
She said the occupancy rate for 2019 was 77.8% and that for 2021 is currently 58%.
She estimated her property to be $ 15-20 million off from 2019.
The emergency rules, along with Governor David Ige’s August announcement asking residents and visitors to delay all non-essential travel to and from the islands, have also had an impact on business, Vento added. .
Lisa Bryant, who works at Rentals Maui Inc., a vacation rental company, also called for the tax start date to be moved to November or December to allow businesses to adjust.
She was also concerned about how the law would affect those who have already booked in advance as well as discrepancies that could arise between state and county tax returns when the new law is put in place.
Citing state provisions, Rawlins-Fernandez told the meeting that if reservations have already been paid for in full and the accommodation does not have a disclaimer or legal means to add the new tax of 3%, then the new tax does not need to be applied.
But if a reservation is not paid and complete and the accommodation has the option of adding the 3% tax, it must do so.
In a statement to The Maui News Friday afternoon, Mufi Hannemann, president and CEO of the Hawai’i Lodging & Tourism Association, said that while they oppose any new tax or fees that would increase the Overall Cost of Travel to Hawaii While companies are still struggling to get associates back to work and trying to recoup losses, they recognize that Maui County is determined to enforce the surcharge.
“Therefore, we urge that the funds generated by the surcharge be spent to address specific tourism-related issues and challenges through a transparent and open process,” Hannemann said. “The last thing we want to see is money placed in the general fund to balance the budget.”
Maui County CFO Scott Teruya said after the meeting that the state will continue to factor in financial reports from visitor accommodations and collect its existing 10.25%, with companies remitting monies owed to the government separately. county under the 3% tax.
He said no elaborate system was to be put in place and the county had an account to accept the funds.
More information on the tax will also be posted on the county’s website soon, he added.
* Melissa Tanji can be contacted at [email protected].
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