Hawaii will raise visitor taxes to tackle climate change
HONOLULU (HawaiiNewsNow) — Gov. Josh Green is celebrating lawmakers’ decision to increase tourist taxes and dedicate the new money to what they call Hawaii’s climate emergency.
Making it happen required compromise and resisting a threat from the cruise ship industry.
Green first called for a “green fee” on tourists during his campaign three years ago.
Now he says there will be hundreds of millions for climate-related projects without driving visitors away.
“This is the money that we’ve been waiting for to deal with climate change,” Green said.
The money could be enough to restore beaches or buy out threatened shoreline properties, harden infrastructure, like roads and utilities, to resist increasingly powerful storms, and restore greenery and forests ravaged by neglect or drought and now fuel for wildfires.
“I’m grateful that the Legislature, after working through this for two years, has given me a bill which I will sign,” Green said.
Lawmakers were concerned about the weakening tourism business, so they reduced the size of the tax increase the governor proposed for hotels and vacation rentals, according to House Majority Leader Sean Quinlan.
“We were worried that the industry wouldn’t be able to handle that big of a jump and we also didn’t want too much negative press, you know, globally or even nationally, about having extremely high tourism taxes at a time of economic uncertainty for a lot of people on the mainland,” Quinlan said.
The proposal that emerged late from conference negotiations Friday night would raise the tax on hotels and vacation rentals from 9.25% to 10%. It also lays a new 11% tax on the value of cruise ship cabins while in Hawaii ports.
Cruise ship executives have argued taxes beyond the costs of harbor services are unconstitutional and threatened to sue.
Lawmakers believe the proposal will hold up in court, but if the cruise ship tax is blocked, it would not effect the rest of the law.
They estimate the tax increases would bring in between $85 million and $100 million a year to be dedicated to “mitigation and adaptation to address the climate emergency.”
During the session, administration agencies had said they were already prioritizing hundreds of projects for the fund, but lawmakers decided not to earmark the money for a special fund or particular agency or specific type of project, and essentially bring all potential projects back before the Legislature.
“We’ve asked the governor to make recommendations to us every session about how the money should be spent,” Quinlan said.
The governor said he’s willing to work with lawmakers.
“We will be fully transparent and it will be approved by the Legislature. No funny business here,” Green said.
By earmarking tourist taxes to large environmental projects, and also demoting the Hawaii Tourism Agency to be equal to other departments, it’s clear lawmakers think the state should manage tourism instead of HTA.
“It’s $62 million a year, which is their current budget recurring,” Quinlan said. “Probably 30-plus percent of that money is tied up in things that have nothing to do with the visitor and have nothing to do with quality of life for the local resident.”
Senate Bill 1396 and a couple hundred others will receive final votes on Wednesday.
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