Governor Abercrombie today dismissed industry concerns that his proposal to repeal the sunset on the high transient accommodations tax rate would harm Hawaii’s tourism industry. The bill (SB 1194 SD2) failed to pass the House Committee on Tourism today.
In response to a legislator’s echoing of industry worries that the high tax rate is hurting business and the greater Hawaii economy, the governor interrupted by saying he has been hearing “the same propaganda.”
“As soon as he received word that Hawaii’s economy was on its way to recovery, the governor acted to accelerate an agenda of increased spending and taxes,” said Minority Leader Aaron Ling Johanson. “It deeply concerns our caucus that the chief executive of our state shows this kind of insensitivity for our state’s private sector needs. We lawmakers should really be considering expert perspectives, not outright dismissing them.”
In addition to inundating the legislature with requests for new and higher taxes and fees this legislative session, Governor Abercrombie proposed higher spending on numerous government programs. In its budget passed last week, the House countered the governor’s request with a $600 million reduction, citing the need for a more conservative approach as the state’s economy recovers.
“As indicated by the Hawaii Tourism Authority, our visitor industry is a very volatile and sensitive one, and we need to nurture it rather than criticize it,” said Rep. Gene Ward, Minority Leader Emeritus and Vice Chair of the House Committee on Economic Development & Business. “For the benefit of all of Hawaii, we should take seriously all viewpoints, especially those of the largest sector of our local economy.”
The TAT rate was incrementally increased twice in 2009 and 2010 from 7.25 to 9.25 percent. The rate is set to revert to 7.25 percent on June 30, 2015 if the sunset is not repealed.