New Tax Proposals at the Honolulu Council

From Hawaii Together, with host Keli'i Akina and guest Tom Yamachika, August 30, 2021

The Honolulu City Council is considering adding a new tier to its property tax structure, bringing into question whether “taxing the rich” is a good policy to pursue.

At the same time, the county will decide whether to adopt a newly allowed county-level transient accommodations tax, of up to 3 percentage points above the existing 10.25% state TAT.

Will it go for the entire 3 percentage points?

And should the over-budget and behind-schedule Honolulu rail project get a portion of the revenues?

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Will Honolulu hike taxes again? (Does the sun rise in the east?)

New taxes being considered by the Honolulu City Council were the focus of Institute President Keli’i Akina‘s  “Hawaii Together” program on Monday. His guest on the ThinkTech Hawaii program was Tom Yamachika, Grassroot Scholar and president of the Tax Foundation of Hawaii, which keeps track of changes in tax law and how taxpayer dollars are used.

Among proposals being considered are a 3-percentage-point county surcharge to the 10.25% state transient accommodations tax, and new tiers or thresholds for property taxes that supposedly will affect only the more well-to-do.

Yamachika said continually increasing tax rates on residents comes with a risk: “There is a point at which you squeeze these people too hard and they say, ‘Heck with this, I’m out of here.”

Yamachika said adding a county surcharge to the TAT, which is mostly paid by tourists, also is problematic.

“Somebody who is staying in a hotel is going to find lots of tax on the bill because we have [the] 10.25% [TAT], plus 4.7% [GET], plus another possible 3%. That’s a lot of tax. It’s close to 20%. Whether that’s going to affect demand, it probably will. We just don’t know how much.”