Finding meaning for Hawai‘i

It has been almost two months since I wrote an op-ed piece titled “Grief for a World Killed by covid” (I still refuse to honor the germ by capitalizing it). Hawai‘i is still shut down to visitors, and the anticipated August opening has been moved back to September due to the spikes on the mainland and limited testing abilities available here. Our numbers in Hawai‘i, though rising, are much better at about one positive test per thousand population, versus 10 times that rate for the nation as a whole. Our government officials are struggling with the decision to re-open our tourism dependent economy at the risk of increasing our infection rate. Our isolation has become our best weapon against infection, but our worst enemy at stimulating our economy.

On a positive note, the islands are regaining much of their beauty. The roads are pleasingly free of thousands of visitors. Eyes seem to be smiling even if we cannot see smiles under the face masks. But we are heading for a financial cliff. Every day, more businesses are forced to shut down when the hopes for recovery get overshadowed by realities of their overhead, dwindling savings and diminishing governmental assistance. Their impacted employees are also facing ends to government stimulus plans, unemployment and stress of unpaid rent and mortgages. We need a government that gives them a tangible reason to hang on until our borders open up to tourists again. A government with a plan, not a hope.

I hope that Hawai‘i does not return to having 10 million visitors here per year. That number was and is unsustainable and has little opportunity for a quality of life here for our residents. Yet, we have built our economy on tourism, and it can be the economic powerhouse it once was, even if we have less tourists.

The key may be to legislate reforms that would aim at maintaining revenue from tourists but actually reducing their number. Economically, that means charging more money for visiting Hawaii. Not just a little more. I propose an increase in the Hawaii General Excise Tax for visitors to 40%, instead of the uniform rate for residents and visitors of 4.5%. I also propose a reduction in the Hawai‘i resident rate to 2%. Based upon our existing system of taxing the tax, visitors effective tax rate on food, lodging, car rentals, and visitor attractions would be about 65% and the tax for residents would be less than half of the current rate. Provisions would have to made for mitigating the progressive nature of our excise tax in the supply chain to the ultimate taxpayer to avoid government swallowing the vast majority of all money flow in the islands. The idea is to make Hawai‘i more expensive to visit, and less expensive to live in. If tourists want to visit a relatively pristine, uncrowded, Aloha based place, they will have to pay more, a lot more than they used to.

If such a provision is enacted, here are my predictions of what will happen:

1. Numbers of tourists will go down significantly, maybe by half.

2. Revenue per tourist will about triple. Net visitor spending will increase.

3. Some hotels will not be able to survive the higher rates necessary to pay the tax. State revenue will be increased, and available to purchase hotels that shutter.

4. State revenue will be increased, and available to purchase hotels that shutter.

5. Hotels purchased can be used for our homeless, as long as there are comprehensive services to support the mentally ill, the drug dependent, and those with insufficient resources and income. I would venture that almost no one on the streets has zero income. They need assistance in allocating their resources to stay off the streets. Hotel rooms may be the step necessary to their permanent independence.

6. Other hotels purchased by our government may be available for low-cost rental or for resale to our residents hoping to establish a foothold in their state. The cost of a hotel (prior to the pandemic) seemed to hover around $200,000 per room. Many of the hotel rooms are larger than the smallest Kakaako units selling for $700,000+. State provided 100% financing at current mortgage rates would allow a purchase at $843/month, which is well below the “affordable” solutions available today.

This two-tiered tax system will have its detractions. Visitors will not like having to pay $100 for a meal at a restaurant that a Hawaii resident can get for $36. But, that’s the price of paradise. There should be rules for who gets the “kama‘aina” rate of tax. Kanaka Maoli (they are true residents, forever) those born in Hawai‘i, or those that have lived full time in the islands for at least 5 years would be entitled to the lower tax. One could also lose the exemption by “gaming the system” (profiting by paying the lower tax rate for a fee), committing a felony, by operating an illegal vacation home, pr by being a public official convicted of corruption. During this era of emergency proclamations, refusing to wear a mask may provide unprecedented incentive to comply. It is a privilege to live in Hawai‘i. Let’s think outside of the box to allow us to not only live here, but to thrive here in our new, uncharted world.

•••

Nolan Ahn is a resident of Lihu‘e.

17 Comments
  1. Jake July 24, 2020 2:06 am Reply

    All of these whacked out ideas for different rules for “visitors” vs. “locals” all violate the Equal Protection Clause of the U.S. Constitution.

    Why can’t any of you figure that out? You can’t treat two different groups differently under the law.

    The current quarantine lawsuits against the State of Hawaii are far from over as well. At the end of the day, if the suit gets to the U.S. Supreme Court, the mandatory quarantine will apply to everyone entering the State of Hawaii or no one.


  2. Ginger Doll July 24, 2020 2:54 am Reply

    Wow. Just wow.
    This would empty our island and the only visitors would be the ones staying at the Hyatt and St. Regis.
    On the other hand, the poor and homeless would be living in better accommodations than the rest of us.


  3. manawai July 24, 2020 9:31 am Reply

    It’s ludicrous how some insurance salesmen with degrees in anthropology consider themselves “financial planners”. Insurance salesmen love to characterize themselves as this to distract their “clients” from the fact that all they want to do is sell you insurance. Remember, insurance companies are in the business of collecting premiums and not paying out claims.
    The author thinks this is so simple. If it were, then we’d have done it already. But it doesn’t work. You up your prices to reduce the number of people who can afford to come here to vacation and you will collect less money; not 3x’s the amount we were generating. He cites no source for his made up figures or how he came by them. He just wants you to believe!!
    And then with all this fantasy money he says the State will collect from fewer tourists ande all the jobs they support, it will buy out the hotels that have failed by these ill-considered actions and put thousands of people out of work…like they are now with Covid-19! Then it will squander those monies on fiscal mismanagement that of those assets to lose even more money. ???
    Yes, this is a wonderful example of flawed socialist thinking. “Government should own and control all the means of production” and drive out entrepreneurs and all private businesses that are the true engines of the economy. Our current situation, where so many businesses are shuttered and the government must borrow trillions of dollars that our decedents will have to repay, bellies the author’s pie-pin-the-sky proposal. So the author says, in effect, let’s change our system to put the hotels out of business (Where are all those employees going to work again?) so we can create more expenses without offsetting it with any new revenue sources.
    Well, if you aren’t aware at how sadly incompetent and inefficient government is with our tax money, then you must be sound asleep. The author disrespects the readers and thinks we’re dumb enough to swallow his fantasy plan which has been put forth in the past and thank goodness seen as, to put it mildly, impractical. What’s funny is to support his plan he has to include the threat of felony imprisonment to make it work. Thinking out of the box in this case means jumping out of the frying pan into the fire.


    1. Kimo August 1, 2020 8:59 am Reply

      manawai, I Agree with you whole hearted. Nolan MUST be a liberal progressive Democrat!


  4. kauaiboy July 24, 2020 9:44 am Reply

    Wow. What great ideas…NOT!

    With your suggestions, only the super-rich could visit Kauai, and they would bring their super-rich and powerful ideas with them. Their influence would grow. The heck with conscientious visitors who are respectful and have a lot to offer us residents in the islands.

    Get a grip, Nolan, and get a job. And get away from the idea of hanging on the teat of governmental assistance as a means of living the life you desire.


  5. RevW July 24, 2020 10:26 am Reply

    Wow. Amazing logic. “The price of Paradise”? More like, “how to create a permanent recession for Hawaii”. The reasoning behind these suggestions has little connection to the realities of financial survival for *anything* – State, corporate, or individual. Regressive, discriminatory & punitive treatment of either visitors or residents would encourage both to go somewhere else. Tourism is Hawaii’s dominant State income resource; virtually eliminating tourism would bankrupt the State, along with generating lawsuits against the State by individuals, and sanctions by the Federal government. Nobody would benefit from this gameplan, or “thrive”. The few imaginary wealthy tourists who would supposedly be willing to pay a 65% excise tax to vacation somewhere that was clearly discriminating against them would not “increase State revenues” … Those few who could afford to visit Hawaii at all would chose to vacation somewhere else where they were welcome.

    Eliminating most tourism from Hawaii would be the result of Ahn’s recommendations for reviving Hawaii’s economy. Those whose income depends on tourism would be pushed into the ranks of the poor, homeless, unemployed … they could join the poor and homeless already living in the ‘abandoned’ hotels that the government would *not* have the funds to buy or maintain, (along with roads, public schools & all the other not-for-free that State does). That’s all NOT a prescription for *Paradise*.


  6. Doug July 24, 2020 11:20 am Reply

    You are on the right track, but went off the deep end. What needs to happen is to increase the expense of coming here to balance out the cheap airfares in order to keep out the “party crowd” which buy a $100 air ticket and then stay at a hostel or on the beach etc. and pump no further money into the local economy. Increase the taxes on airfare on out of state flights and you will get the serious tourist of all income levels who will spend into the local economy.


  7. Ed Dedeo July 24, 2020 12:05 pm Reply

    Brilliant and practical ideas presented here.
    Residents of Hawaii have lived under the burden of making the islands a cheap high volume tourist warehouse.
    Enough!
    Clearly this is the direction to pursue.
    Thanks to the author for both your caring and insight.


  8. Rick July 24, 2020 4:46 pm Reply

    The author is making our leaders look amazing! lol thank God this guy is not in charge…On a side note- “the roads are pleasingly free of thousands of visitors” this is not true for Kalaheo. Kalaheo has been jamming! I honestly can’t tell the difference….


  9. WAVE July 24, 2020 7:19 pm Reply

    KAUAI BELONGS TO GOD

    IT IS ONLY THE TRULY SELFISH WHO ARE
    HERE NOW EITHER THROUGH FAMILY HISTORY OR BY HAWAIIAN AIRLINES
    THAT WISH TO PREVENT JOYFUL HAPPY CLEAN FRIENDLY
    PEOPLE FROM SEEING AND APPRECIATING GODS BEAUTIFUL ISLAND…. KAUAI BELONGS TO GOD ,,NOT YOU !!


    1. Simple July 28, 2020 2:10 am Reply

      Simple solution, let your god end the virus…


  10. Jamie Rainbow July 24, 2020 8:23 pm Reply

    Good theory, maybe just tweak it a bit. A per person charge say 100$ to be able to come to an Island, I am a middle class construction worker and I would happy to pay a fee. Maybe start a lottery for entry to the state, then you could control the number of tourists. 1.3 million visitors a year(Kauai) seems like a lot of environmental wear on an island, just sayin
    Mahalo for the letter


  11. Peg Hambrecht July 25, 2020 6:21 pm Reply

    I have visited Hawaii 11 times since I was 19 and I’m 64 years old now. I strongly disagree with your plan and would never be able to afford to come back to Hawaii under your plan. Many people would not be able to come there and experience the beauty of the islands and the Spirit of Aloha. What happened to that? We actually need more of that over here on the mainland! I Love the culture, people, music, dancing, etc. that make up Hawaii. I cannot speak of the affordability to the multitudes of Japanese that frequent the islands. I made one Japanese friend there and she told me they come there twice a year many times. I WISH!!! This plan gets a “NAY” vote from me! Mahalo for allowing me to express my opinion. Peg Hambrecht (please note the email is misspelled because the man that opened my computer did not know how to spell Hawaiian.)


  12. K.D July 26, 2020 4:24 pm Reply

    To all the locals posting here and in other venues. You know us mainlanders, malahini, haole, etc can read this and are taking note.

    I have zero regrets about cancelling my 2020 Kauai vacation to keep the population safe. It was also pointed out to me, by the staff at our place, that food may be scarce during pandemic times.

    In 1999, we were gifted money by my father in law, allowing my kids and spouse to make our first trip to Kauai. Pure magic.

    So glad my kids did not know how many locals hated us tourists.

    It hurts that a place we have loved appears to scorn us, even though we have tried to tread lightly and with aloha. My daughter married a fine man with Hawaiian roots (grandpa worked cane). His family simply does not have the attitude of “haole bad”

    After this pandemic is over, many of us will recall how the locals spoke of us.


    1. Kauaidoug July 31, 2020 9:43 am Reply

      KD Let me guess you stayed in Princeville?


  13. Tom Thompson July 27, 2020 7:42 am Reply

    Those are great ideas. Tourism must be moved away from. It benefits many, mostly absentee owners and business but the net profit to the island, after considering the infrastructure costs of tourism, is minimal.


  14. steven August 2, 2020 9:11 am Reply

    Easy solution. Another mandate. Only two people per legally permitted bedroom in legal vacation rental.


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