More on Green Fees

by Tom Yamachika, President, Tax Foundation Hawaii

Once every five years or so, the Hawaii Constitution asks our government officials to put together a Tax Review Commission.  Its job is to “conduct a systematic review of the State’s tax structure, using such standards as equity and efficiency.”

To some people, it means it’s a chance to get in front of lawmakers and argue that we aren’t being taxed enough.

One of the proposals that the commission was urged to push was for the establishment of a “green fee.”  As its proponents put it:

Visitor green fees are used all around the world to generate revenue to protect natural and cultural resources, create green jobs, and enhance the visitor experience. Visitor green fees are payments made by tourists, primarily to regulatory entities, with the explicit purpose of funding natural resource management. This policy approach, now implemented in dozens of geographies worldwide, offers a solution to offset visitor impacts to ecosystems, and provides a means to protect nature that communities and tourists alike depend on.

Last year, we wrote in this space that the kind of green fees that are imposed in foreign destinations aren’t imposed in any state of the United States – probably because such a fee would be unconstitutional.  States have no right to burden the right of Americans to travel throughout the country, which means we can’t tax the entry or departure of mainland tourists.  And there is another part of the U.S. Constitution that forbids States from discriminating against foreign commerce, because that is a task left exclusively to the federal government.  So, we can’t impose such a fee on foreign tourists either.

To get around these restrictions, the proposal before the Tax Review Commission seeks to instead build on existing taxes and fees:

• Using existing state Transient Accommodations Taxes or adding a TAT surcharge;
• Implementing or increasing park and other user fees for outdoor activities;
• Imposing general excise tax surcharges for certain visitor-related activities, services, and purchases; and/or
• Some combination of these or other approaches.

The U.S. Constitution requires that if we kama’aina want to travel to another island and stay in a hotel, rent a car, or otherwise do touristy stuff, we are going to get whacked to the same extent as other tourists from other places.  Is that what we want?

We also need to realize that most of our economy is based on tourism.  When COVID-19 shut down our tourism, widespread pain and anguish was felt in our state between layoffs, business closures, and rent and mortgage defaults.  Taxing tourism to death might have the same impact.  “Now is not the time to visit the Islands,” Gov. Ige said in August because of our COVID surge.  Jacking up the taxes on the tourism industry is like telling the tourists that there isn’t ever a good time to visit the Islands.  Is that what we want?

So, before we go down the road to green fees or something like them, we should be asking ourselves if we really want to go there.

And by the way, Tax Review Commission, it’s questionable whether “finding new taxes” is in your job description when we have enough problems with the taxes we have.