It’s Tourism, Mooooo
by Tom Yamachika, President, Tax Foundation Hawaii
A couple of weeks ago, we raised the question of whether lawmakers are looking at businesses and taxpayers as cows to be milked as opposed to constituents to serve.
This week, we look at another set of folks who seem to rank high on the milking list: tourists. Lawmakers have been pulling on those udders a lot. Most recently, they juiced up the transient accommodations tax (TAT), now at 10.25% (more than double what it started out as), by scooping the counties’ share of the tax but, in a fit of magnanimity, allowing the counties to slap their own TAT of up to 3 percentage points on top of the state rate.
And, in the year before that, lawmakers enacted a little-known provision that would let the tax authorities go after the personal assets of responsible officers or employees of hotels and similar companies if they ran up a bill for TAT but weren’t able to pay it for whatever reason. So, folks in the industry have a very good reason to take the TAT more seriously than they ever did before.
What is the result of that incessant milking? As the Star-Advertiser recently reported, a recent survey of vacationers found that many tourists didn’t want to come back anytime soon, primarily because their vacation cost too much, that it wasn’t a good value for the hard-earned money that they spent.
This apparently has happened for two main reasons. First, hospitality has its limits. When Tutu tells you it’s okay to have a few friends over at her capacious estate in Maili, if you bring two or three you have a good chance of scoring some of Tutu’s raisin cookies; if you bring 10 you’ll probably be left to your own devices most of the time; and if you bring 100 you’ll probably find the door slammed in your face with no invitation to return in the foreseeable future. Some folks have reached their limit and are trying to find a way to slam the door.
Second, and perhaps more important, tourists aren’t constituents. Almost by definition, they don’t vote for local politicians.
So that’s why local politicians think about tourists and hear: Mooooo.
But one thing to be mindful of is that if you take away tourists, our economy doesn’t have much else to sustain it. This was proved beyond a doubt in the first year of the pandemic. We told tourists not to come. Tourism revenues dried up to less than a trickle. Our politicians were falling all over themselves trying to deal with the colossal budget hole that they were seeing. One wonders what they would have done if the Feds hadn’t bailed us out.
Another issue is that we as a State don’t have the right to limit tourism openly. Those in the U.S. mainland have a constitutional right to travel anywhere in the country, including here, as we have written about before. International tourists probably have the same rights because the federal government, and not the States, decides international relations.
We need to strike a wise balance between showing the Aloha spirit to all of our visitors, which is one thing we are famous for, and treating them like cattle.