Why does Kaua‘i County have the lowest property tax rates for hotels and resorts in the entire state of Hawai‘i?
What public purpose does it serve to charge the Hyatts, the Marriotts, the Hiltons, and so many other off-shore foreign corporations less money than any other county in Hawai‘i?
As of the current fiscal year, July 1, 2021 to June 30, 2022, the hotel and resort tax rate (per $1,000 of assessed valuation) by county, is as follows: Honolulu $13.90, Maui $11.75, Hawai‘i Island $11.55, and Kauai $10.85.
Kauai charges $3.05 (per $1,000 of value) less than Honolulu.
The taxable value of hotel and resort properties on Kaua‘i is $2,667,497,850.
Stay with me for a moment, please, while I do the math.
Increasing Kaua‘i’s hotel and resort rate to equal Honolulu’s rate would bring in over $8 million every year that could be allocated for affordable housing, homeless shelters, youth programs, drug treatment centers and more.
$8 million more with just a stroke of a pen. All paid for by off-shore corporations that are already paying this rate for their properties located on other islands.
Wait. It gets better.
Let’s not forget transient vacation rentals (TVRs), which are essentially individual homes operated as mini hotels but located in residential areas.
What if Kaua‘i did what Maui does and charged TVRs the same tax rate, or even slightly more, than hotels and resorts?
The total taxable value of TVRs on Kaua‘i is $3,830,495,450 (yes, that’s more than hotels and resorts).
Increasing the Kaua‘i TVR rate to that of the O‘ahu hotel/resort rate would generate an additional $15,513,505 annually.
Let me spell it out.
If the Kaua‘i County Council had the courage to increase property taxes on hotels, resorts and TVRs to the same level now charged by the City &County of Honolulu, our community would benefit to the tune of over $23 million annually.
That’s $23 million per year above and beyond what is now coming in and used to run the county.
That’s $23 million per year for affordable housing, homeless shelters, youth programs, drug treatment centers and more.
That’s $23 million per year that could be used for much-needed infrastructure improvements — sewer, water, roads. Did I say potholes? Think about how many potholes $23 million would fill 😉
And remember, that money would 100% be paid for by people on vacation, who don’t live here, but yet who benefit from and utilize our collective public resources — people who are already paying that rate when they island hop.
What’s there not to like?
Unfortunately, when a very modest proposal to increase TVR property tax rates by only $1 and estimated to raise $4.5 million was introduced last week, it was shot down in a 4 to 3 vote.
The three reasons given by the four “no” votes were essentially: We don’t need the money right now. How can we be sure the money will be spent on affordable housing? What about the impact on local residents who also operate TVRs?
Our county desperately needs additional funding. Affordable housing, while being our top priority, is only one of many critical areas in need of support. We have a languishing youth drug treatment facility, homeless shelters at capacity, have thousands of cesspools where we need modern sewer systems, and our only landfill is perpetually at capacity.
These are urgent needs, not simply wants.
As to the fortunate local residents who own a second home they operate as a TVR? They should just pass the costs on to the tourists who are renting the place, just as every other hotel does.
While good people can look at the same information and come to different conclusions, for the life of me I cannot understand the resistance by those four councilmembers.
Honolulu does not have fewer tourists visiting because taxes are too high. Ditto for Maui. Raising our property tax rates to match the Honolulu rate will not have one iota’s impact on the tourism economy here on Kaua‘i.
Kaua‘i could have $23 million more to spend each and every year, tourists and hotels would pay the price, and local residents would benefit.
Tell me again what’s there not to like?
Tell me again why you voted no for a basic $1 increase that would have yielded $4.5 million during its first year specifically intended for affordable housing and in subsequent years could be allocated toward whatever needs the council deemed a priority?
To be absolutely clear, the council, not the mayor, has the legal responsibility and authority to establish the county budget. The mayor will submit to the council the administration’s preferred budget, but the council has final say and can amend or approve as they see fit.
Here is Kaua‘i Charter Section 3.10. Annual Budget and Capital Program. The council shall enact an annual budget ordinance, which shall include both the operational and capital expenditures for the fiscal year and the method of financing same. The council shall provide sufficient revenues to assure a balanced budget.
Sources for tax info:
w https://kauai.granicus.com/MetaViewer.php?meta_id=139956
w https://www.realpropertyhonolulu.com/media/1789/ratesfy22.pdf
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Gary Hooser is the former vice-chair of the Democratic Party of Hawai‘i, and served eight years in the state Senate, where he was majority leader. He also served for eight years on the Kaua‘i County Council, and was the former director of the state Office of Environmental Quality Control. He serves in a volunteer capacity as board president of the Hawai‘i Alliance for Progressive Action and is executive director of the Pono Hawai‘i Initiative.
