The House and Senate passed the law that raises the accommodations tax on tourists. On average it would mean visitors would pay about $7 dollars more in taxes every night. It’s expected to raise $90 million the first two years, unless it scares visitors away.
Walk through Waikiki and people are there, just not as many. Hotel occupancy is down to 60 percent and the state needs a boost, but hotel executives say raising the tourist tax is the worst idea.
“We are not a business destination. Nobody has to come here like they go to New York or San Francisco. Nearly everyone who comes here is a discretionary dollar, a discretionary decision so why would you want those people to think there is less value at a time when we got to get more people here,” said Keith Vieira, Starwood Hotels & Resorts, Senior Vice President.
“My response is its absolute lunacy,” said State Senator Fred Hemmings, (R), Minority Leader.
Senator Hemmings voted against the tax increase. He says the private sector is taking a beating. More than 46,000 people are out of work in Hawaii, but none of them are public employees and unions have to share the sacrifice.
“The only people that are walking away from this terrible economic crisis unscathed without losing one job and not having one cent cut from payroll so far are government labor unions and it’s just not fair,” said Senator Hemmings.
“That’s not the fault of government workers, its easy to blame government workers, it’s another thing to understand they’re not the ones that set their pay,” said State Senator Clayton Hee, (D), Kahuku, La’ie.
Democrats voted in large part for the tax increases in hopes of taking less from locals.
“What’s going on here is they don’t want to raise your taxes because you’d vote them out, they don’t want to cut state jobs because the jobless rate is bad enough already, and that leaves hotels, the goose that lays Hawaii’s golden egg,” said Howard Dicus, KGMB9 Business Reporter.
Global publications are picking up the headlines about the tourist accommodations tax and hotels worry lawmakers made the most beautiful place on Earth less attractive.
“I think it’s the message more than the one or two percent that will hurt us,” said Vieira.
The bill is on the way to Governor Lingle’s office. Her spokesperson says she will veto the tax increase saying it’s destructive to the economy.
Right now tourists pay on average $25.79 a night in taxes on their hotel room in Hawaii. The national average is $12.69.