No. 1 In the World – In Tourist Taxes

by Tom Yamachika, President Tax Foundation Hawaii

Last month, the website money.co.uk published an article giving our Honolulu a claim to international fame (or infamy).  It listed the city as having the highest tourist tax of any city in the world.  It noted our 10.25% transient accommodations tax, to which is added 3% county TAT.  “That’s already a hefty tax anywhere in the world,” the article says, “but when consider that the average room in Honolulu costs £321 ($390), that equates to £42.53 ($51.70) a night.”

The runner-up, according to the article, was San Francisco, which charges a 14% transient occupancy tax.  Its average room night was a bit less pricey at $212 per night, leading to a tax bite of $29.61 per night.

Meaning that, even with the article’s numbers, Honolulu is 75% higher in taxes than the second most tourist-taxed city in the world.

But that doesn’t show an accurate picture.  The article seems to have screwed up.

You see, they forgot to include the GET, which appears on hotel folios on top of the 13.25% TAT.  So, our tax is actually higher.  Quite a bit higher. 

Indeed, if 4.712% is added in, our tax toll rises to 17.962%, or $70.05 a night (£57.62 for those keeping score in British pounds sterling).  This astronomical total is almost double the levy in San Francisco and almost six times that in the priciest destination in a non-U.S. country, namely Amsterdam in the Netherlands, which was scored at 11.31 euros (£9.73 or $11.82) a night.

But wait!  There’s more.

The article also compares countries charging flat rate tourist taxes, such as departure taxes charged at the airport.  Mexico is currently the winner at 224 Mexican pesos ($11.12 with currencies being converted at the rate in effect on June 30, 2020).  The next few countries, Thailand at 300 baht ($8.53), Belgium at 7.50 euros ($7.87), and Japan at 1000 yen ($7.33), all impose departure taxes at less than $10.

Conservation groups in Hawaii have been pushing for enactment of a Hawaii “visitor green fee,” which would work much like these departure taxes.  They, as well as one University of Hawaii economist, have noted that some island destinations such as Palau and the Galapagos Islands levy a $100 visitor green fee, and have urged Hawaii to adopt such a fee.  In the 2021 legislature, two bills (HB 805 and SB 666) would have imposed a visitor fee of $40.  

If we actually imposed such a fee, it would vault us to the top of this list as well, and by a wide margin.  (Apparently Palau and the Galapagos didn’t make the list of the 100 most visited cities according to Euromonitor International, which the rankings were based on, and thus weren’t included.)

Fortunately, as we have noted before, such fees would violate the U.S. Constitution and thus cannot be charged by any individual State or county.  So, we shouldn’t be spending more time and energy trying to make our state and cities even more of an international outlier when it comes to tourist taxes and fees.

For those of us who think tourists are bad news and should stay the heck away from Hawaii Nei, these taxes are probably going to accomplish what you want.  Tourists are going to think twice, or more, before shelling out for an experience in Hawaiian paradise.  We have seen the economic result of tourists staying home en masse, because this is what happened during the pandemic.  The pain of workforce layoffs and business closures continues to this day.  Is that the future you want?  Is that the future we want?

We need to stop winning international contests like this.

RELATED: Honolulu: Highest Tourist Taxes on Earth