HLTA Supports Governor’s Decision to Veto TAT Bill

The Hawai‘i Lodging and Tourism Association issued a response to Gov. David Ige’s intention to veto SB 1292, which would require hosting platforms that collect fees for booking services to register as tax collection agents and collect general excise and transient accommodation taxes for transient accommodation bookings from operators and plan managers.

“We are pleased that Gov. Ige intends to veto Senate Bill 1292. HLTA had gone on record stating its official position and met with the governor to make our feelings known on this matter,” said Mufi Hannemann, HLTA president and CEO, on June 24, 2019. “We hope his actions will lead to a more collaborative effort between the state and the counties to reign in the illegal transit vacation rentals.

“The tourism industry stands ready to assist to ensure that there’s a level playing field, that everyone engaging in the lodging business will pay their fair share of taxes, and that our local residents will be able to have more affordable housing opportunities in their neighborhoods.

“In addition to thanking Gov. Ige, I want to also commend the Honolulu City Council for their leadership in passing out Bill 89 (2018). I also wish to extend my sincere mahalo to everyone in the hospitality industry and the public at large that supported HLTA’s position to vigorously support Bill 89 (2018) at the county level and to oppose Senate Bill 1292.

The governor’s rationale for including the bill on his veto list was that the state’s taxation of transient accommodations through hosting platforms should complement the counties’ regulation of transient accommodations. While the taxation of illegal transient accommodation uses would not legalize these operations, there is concern that the collection of taxes on illegal transient accommodations could be viewed as legitimizing these operations.

Additionally, the recent passage of Bill 89 (2018) by the Honolulu City Council, which is pending signature by Mayor Kirk Caldwell, is an example of a county that has enacted specific enforcement provisions governing transient accommodations and hosting platforms. These measures, and other such county measures, raise significant issues for the Department of Taxation that were not fully contemplated by the Legislature when it passed SB 1292.

Both the federal Internal Revenue Service and the State Tax Department are obligated to collect taxes on business activity, whether legal or illegal, as affirmed by the U.S. Constitution (16th Amendment) and a hundred years of court decisions. While SB 1292 may make tax collection more efficient, the recent passage of Bill 89 (2018) by the Honolulu City Council could affect certain logistics in the collection of those taxes. Further review is required to ensure there are no adverse unintended consequences that were not fully contemplated by the Legislature or DOTAX when the bill was debated during the Legislative Session.

About the HLTA

The Hawai‘i Lodging & Tourism Association is a statewide organization representing hotels, condominiums, timeshares, other lodging entities, suppliers, and related firms and individuals. HLTA is dedicated to supporting Hawai‘i’s visitor industry through education, political action, and membership benefits, and raising awareness about its contributions to communities throughout the state.