Proposed bill to take away TAT allocation denied

HONOLULU — The counties’ cut of the transient accommodations tax is secure.

The House Finance Committee unanimously voted this week to defer HB 1586, which sought to phase out the allocation of money generated from the TAT over a period of three years.

The decision is the result of efforts by Rep. Jimmy Tokioka of Kauai, who said he sent memos to the chair of the finance committee, Rep. Sylvia Luke to see if she’d consider consider taking action against it.

“I lobbied to get it deferred. I felt comfortable there would be enough support in the House not to move the bill,” he said. “I told the finance chair I was not going to support the bill.”

The bill is killed, and the Legislature cannot pursue it again this session, Tokioka said.

Kauai County Councilwoman JoAnn Yukimura said she expected the bill would be killed.

“The bill, I believe, was a reaction from some of the legislators to the strident demands and demonizing that some councilmembers have perpetrated,” she said. “I believe rational minds will prevail and the counties’ share of the TAT will remain at present levels or a little more.”

Mayor Bernard Carvalho Jr. said he’s “pleased” and “relieved” the measure did not move forward.

“Without the TAT revenues, it would have been very challenging for us to provide the level of public service that our visitors and residents deserve,” he said.

Rep. Kyle T. Yamashita (D-12) introduced the bill in an effort to shift the burden of high property taxes from residents to non-residents who own property in the state.

Taking away the TAT subsidy would make up for part of the reductions in personal income tax collections and encourage the counties to raise property taxes for non-residents and other categories that affect the rising housing cost, he argued.

The bill also addresses Hawaii’s high cost of living by reducing personal income tax brackets for low- and middle-income earners and seniors, but also looks at how the counties’ property tax rates are one of the primary reasons for the state’s high housing costs, according to a release from the Legislature.

In February, the tourism committee voted 7 to 1 to pass HB 1586. While Tokioka, who is vice chair of the committee, voted in favor of the bill at the time, he said he did so with reservations.

“As vice chair, when the chair asks for support, if I’m not supportive of his bills, there could be adverse effects with bills I want to introduce that will benefit Kauai,” Tokioka said.

In 2014, the Legislature capped county appropriation of TAT funds to $103 million.

Had HB 1586 passed, the counties would have been allocated $93 million for fiscal year 2017-18, $62 million for fiscal year 2018-19 and $31 million for fiscal year 2019-20, according to the bill.

Kauai gets 14.5 percent of TAT. If passed, Kauai would have received about $4.5 million by fiscal year 2019-20.

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