Thursday, April 9, 2009

Hotel Taxes in Hawaii

Currently visitors to Hawaii pay 7.25% for a "transient accommodation tax" (aka, hotel tax), along with 4.712% for "general excise tax" (aka, sales tax). Politicians in Hawaii are looking at both of these - and not in a good way!

First, currently the TAT goes to the county in which the visitor is staying. Some state politicians are suggesting that the state should keep this money to help deal with the state's budget deficit. Of course, this would hurt county budgets - but they've suggested the counties could add a sales tax (which would be a third tax - not the GET) to make up the difference.

Second, legislators are considering boosting both the TAT and GET rates to raise more money.

The governor of Hawaii, Linda Lingle, has threatened to veto legislation that increases these rates.

Its too early to guess what the final rates might or might not be. But instead of seeing hotel room prices increased by about 12% with these taxes, as the currently the case, you could be looking at a total of 15% or even higher - if both rates were increased, and the county added a 1 or 2% sales tax.

Bottom line - even though tourism is critical for Hawaii's economy, and even though visitor counts have dropped dramatically over the last few months, there are politicians who think that increasing the cost of visiting of Hawaii is a good solution to their budget problem...

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