Council moving forward with county’s own 3% TAT

LIHU‘E — The Kaua‘i County Council is putting support behind the administration’s request to implement a 3% county transient accommodations tax.

Bill No. 2829, which would allow the administration to establish this tax, passed at its first hearing last Wednesday, with councilmembers in favor of finding ways to fill the roughly $15 million per year the state was expected to give the county in TAT revenues.

State House Bill 862, now Act 1 of the 2021 special session, eliminated the distribution of TAT revenues to the counties, and allows counties at their discretion to create their own visitor-accommodation tax of up to 3%.

The state typically pulls in about $103 million from its 10.25% TAT, a portion of which was previously distributed to the counties. So this proposed 3% tax administered by the county would be on top of that.

Officials suggested that the administration would like to see the tax up and running by Oct. 1.

County Finance Department Director Reiko Matsuyama projected that to break even, the county would need to charge between 2.3% and 2.4%.

This proposed bill establishes a 3% TAT on all gross rentals, gross-rental proceeds and fair-market rental value considered taxable to be collected each month. The proposed bill also applies to visitor brokers, travel agencies and tour packagers who arrange transient accommodations at noncommissioned contracted rates, the bill states.

In a previously reported projection, per every 1% TAT increase, the county would see about $6 million in revenue.

“We are not looking at full $17 to $19 million because we only have three-quarters (of the year left), assuming pre-COVID levels would continue based off the calculation of TAT,” County Managing Director Michael Dahilig said.

The money the county would be collecting would essentially be to cover ongoing expenses.

“It’s not a new stream of funding,” Matsuyama said.

When the state cut off the county’s TAT cut in fiscal year 2020 due to the pandemic, the administration and council opted to utilize the reserve fund to balance the budgets of FY21 and FY22.

Matsuyama said the county is working with neighbor counties as well as the state’s Department of Taxation to figure out implementation.

County Council Chair Arryl Kaneshiro suggested he’d like to see the state do the assessment and then forward the county’s share.

“It seems like such a waste of resources,” Kaneshiro said. “They (the state) assess (general excise) tax and they cut us a check for it. I see it as the same thing with TAT. For us to have the same system and pay two different sets of employees to do the same thing, I don’t see it as being anywhere near efficient.”

The council will take up the tax bill at a public hearing next month.

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Sabrina Bodon, editor, can be reached at 245-0441 or sbodon@thegardenisland.com.

8 Comments
  1. RGLadder37 July 25, 2021 12:46 am Reply

    The county can try to implement a 3% tax, but they have no leverage to do this to a greater population. Incoming tourist. By that I mean, these maintenance and repairs on roads and highways will come from other tax dollars. From the wealthy. They might complain when these new assessments are made. State capitol.


  2. LESLIE VONBRIMER July 25, 2021 9:10 am Reply

    More tax?? Really?? So, King Kawakami wouldn’t let us rent our properties during Covid and now ( just as we are getting back to “normal” ) they want to raise taxes? Insert swear word – OFF!


  3. Doug July 25, 2021 10:46 am Reply

    “County Finance Department Director Reiko Matsuyama projected that to break even, the county would need to charge between 2.3% and 2.4%.”
    I disagree, the rising amount of tourist rescues that we have to pay for, staffing a state beach with county lifeguards (Ke’e), maintaining a tourist transportation program/website/shuttle, the amount of road work still needed to be done and other assorted tourist expenses that we pay for will easily make up the difference. Let’s see some actual expense numbers from the County Finance Department in the next article.


  4. Khsgrad July 25, 2021 12:30 pm Reply

    Attention all rents, you rent is gonna increase…. So much for the county council looking out for you!


  5. Gandy July 25, 2021 3:12 pm Reply

    Greedy state and greedy county. One of these days you may not have small businesses to take advantage of anymore.
    You dont have a income problem, you have a spending problem.


  6. RGLadder37 July 25, 2021 8:02 pm Reply

    Yeah well i know a lot of people on the county council played high school sports. So they’ll want to represent the community well. I for one am joining several coalitions to make sure they don’t get paid.

    I never did play any sports as a Pakistani growing up. In Hawaii.


  7. nobody July 26, 2021 10:37 am Reply

    I don’t think tourists mind paying if they can get what they pay for. Sad that we don’t provide the services that we should. If we’re not a good deal they will simply take their money somewhere else.


  8. Ken Ogilvie July 27, 2021 8:36 am Reply

    I don’t understand why implementation of the new tax is an administrative problem. The state already collects a 0.5% “Kaua’i surcharge” on the General Excise tax. Simple change to the on-line state form to add a Kaua’i “surcharge” for TAT as well.


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