Honolulu will implement a city hotel tax. Mayor Rick Blangiardi signed the measure this afternoon.
Most of the revenue from the new tax will be allocated to the city’s general fund and to rail. A smaller portion will go into a special fund to support natural resources impacted by tourism such as parks and beaches.
Bill 40 would levy a 3% municipal tax on temporary accommodation on visitor accommodation. It would be imposed in addition to the state’s current 10.25% hotel tax.
About 58% of the revenue from the new tax will go to the general fund, about 33% will go to rail, and about 8% will go to the special fund for natural resources.
After the first two years, the distribution increases to about 42% of the new TAT going to the general fund and 50% going to rail. The amount that would go to natural resources will remain constant.
The legislature this year ended the sharing of part of the state tax through which counties received a total of about $ 130 million per year, with Honolulu County receiving 44%, or about $ 45 million. The measure passed by lawmakers allows counties to recover funds by implementing their own transitional accommodation tax, or TAT.
Honolulu’s proposed TAT would impose a 3% tax on all gross rental income from establishments such as vacation rentals, hotels and timeshares. It would also apply to non-commissioned accommodation brokers, travel agencies and tour operators.
Oahu is the latest county in the state to adopt its own TAT.
“Bill 40 restores much-needed revenues and is expected to generate new funding to maintain basic municipal services that will benefit our communities,” said Blangiardi. “We sincerely thank the Honolulu City Council for their support in passing this important bill that will help fund vital city functions including policing and fire protection, facility maintenance and infrastructure, improvement of parks, beaches and roads, and the railway project. “
Honolulu City Council passed the measure by 6-3 earlier this month, with council members Heidi Tsuneyoshi, Augie Tulba and Carol Fukunaga voting against because of the portion of the new TAT going to the rail project.