Kaua‘i County Council defers rental car tax class bill

  • Dennis Fujimoto/The Garden Island

    An Avis/Budget shuttle pulls out of the Lihu‘e Airport site, Monday while an Enterprise Rent-A-Car shuttle pulls up for its pick up.

  • Dennis Fujimoto/The Garden Island

    An Enterprise Rent-A-Car shuttle picks up a load of clients, Monday while a Hertz shuttle pulls up at the Lihu‘e Airport site.

LIHU‘E — After strong opposition from major rental car companies, the county administration has asked for a deferral of a bill that would create a real property tax classification for rental car operations.

The deferral, requested and granted during Wednesday’s Finance and Economic Development Committee of the Kaua‘i County Council, came after questions of the legalities of singling out rental car companies. Bill No. 2828 was introduced in July by Councilmember Luke Evslin at the request of the administration.

“We’re looking at this bill, and we’re trying to do the right thing by everybody,” county Finance Director Reiko Matsuyama said yesterday. “We still believe in the policy that this bill will do and we believe these rental cars need to be separate from the industrial class, but we want to be sure that we capture the intent while trying to legally do the right thing as it relates to the definition of commercial vehicle rental usage.”

Tiffany Yajima representing Enterprise Holdings, which includes Enterprise Rent-A-Car, Alamo, voiced concern with the county imposing a tax on personal property.

“We are concerned that this bill exceeds the county’s taxing authority by attempting to tax personal property and motor vehicles under the guise of a tax on real property,” Yajima said in written testimony.

The county’s real property tax is based on use, which provides the county the ability to tax different uses separately based on the underlying assessed value of the property. Real-property-tax classification runs with the use of the land, similarly to how the county taxes short-term vacation rentals separately from the property of a residential home.

At this time, rental car companies are taxed in the industrial class, which runs $8.10 per $1,000 net assessed valuation. In the current form of the bill, there is no set rate for the proposed tax class. The bill also quantifies a car-rental fleet as more than 10 cars.

Councilmember Felicia Cowden presented real property tax information from 12 rental car companies on island, showing that from these companies, the county collects around $162,133 in taxes. The hand-out listed all of the Enterprises’ operations on Kaua‘i, as well as Avis, Budget and Thrifty.

Part of the reasoning of this bill is to limit the “over-abundance of vehicular car usage” on Kaua‘i.

“Beyond ·the impact to road infrastructure, increased car usage has oversubscribed the capacity of highways leading to delays and loss of time, caused over usage of public parking areas, facilitated the oversubscription of public recreation places, and increased the frequency of emergency response calls,” the bill reads.

The measure would only be applied to rental car companies primarily in the of business renting out cars for people to move around in. The bill would not be applied to places like U-Haul or Home Depot which offers rentals for hauling items or companies that provide delivery services.

“It’s unfair to disproportionately single out the rental car business,” Lori Lum, representing Avis Budget Group, said.

Yajima and Lum both argued that state and federal protection laws would be violated with the passage of the bill, which county Managing Director Michael Dahilig disagreed.

“We obviously do not believe that rental car companies fall into a protected class,” Dahilig said.

Dahilig explained that while there is “similar usage” in the movement of goods and commodities, “We believe it’s not appropriate to characterize those as the same class.”

Council Vice Chair Mason Chock requested that when the bill comes back up, both legal and implementation questions will be answered.

“My hope, again, is that we can consider the bigger picture and proposed impact in a way that this body can stand behind and feel confident in the direction that we might fall upon in the future,” Chock said.

  1. Steve O September 2, 2021 5:40 am Reply

    In case anyone is interested, here are the fees I paid on our 13 day car rental for our visit to Kaua’i in May…Customer Facility Charge $58.50 (special fund to build/maintain rental car facilities at airports), Airport Concession Recovery Fee $74.17 (I believe this goes to the airport), Rent Tax Surcharge $65 (state of HI), Vehicle Licensing Fee $28.34 (probably goes to state of HI), Kauai County Tax $4.21 and finally General Excise Tax $32.08. That totals up to $262.30 of fees/taxes for roughly a two week rental.

    1. Doug September 2, 2021 10:40 am Reply

      Needs to cost you more so there are less of you on the road as you could see when you were here that traffic on this island due to rental cars on our roads is horrible. Traffic during the beginning of the pandemic when you were not here was great. Obviously there are too many rental cars on the road and since the rental car companies won’t control the number of cars, we have to control them any way we can. If you can’t afford it, don’t come.

      1. Local Gal September 3, 2021 11:10 am Reply

        For people who want to visit Our islands…no, it’s not an inexpensive destination. However, companies like Elite Kaua’i Car Rental on island don’t charge “Customer Facility Charges, Airport Concession Recovery Fees nor Vehicle Licensing Fees.” You just need to rent from the smaller businesses on island.

        To those complaining about traffic, it’s our County problem. Do you travel? Traffic exists everywhere not just locally. Be kind to our visitors, they’re amazing to go through the hoops to get here and they pay more than their share for it! Mahalo.

    2. Joe Public September 2, 2021 12:00 pm Reply

      Good! Next time catch the bus so our roads wont be so congested

      1. Steve O September 3, 2021 6:27 am Reply

        Thanks for the Aloha.

        I was just trying to put into perspective how much money is being injected in the state and local government already.

        If you’re granted your wish and there are zero visitors renting cars, paying property taxes (yes I pay property taxes in Kaua’i), paying transient occupancy taxes, paying no hotel taxes and the like, you would still have close to the same road system to maintain with less money coming in from outside Kaua’i. There would be less usage, so it costs would go down some, but probably not to the same extent of the lost income that is currently being used to maintain them. I wonder how much your registration, property tax and gas tax would go up to make up the difference?

        There are no easy answers like simply saying no to all visitors. I sympathize with all of you. I’ve been coming to Kaua’i for a long time and have seen the changes over time. We always try to be mindful and limit impacts of our visits. We always leave the beaches and trails better than we found them (compared to the locals that have increasing turned to dumping cars anywhere and everywhere). We don’t drive out to Ke’e just to watch a sunset. We don’t trespass on private property. We try to avoid peak times, especially when driving through Lihue or Wailua/Kapa’a.

  2. Rev Dr Malama September 2, 2021 7:55 am Reply

    God forbid that the multiple excess of Kauai county employees should actually use other countries success models in limiting numbers of cars on the road and visitors to our tiny, eco bashed island!!!
    The models exist but it starts with trimming the pork fat at home first…. otherwise it’s just blatant discrimination.

  3. barbara guiliano September 2, 2021 8:26 am Reply

    I’m voting for Evslyn next time. Watching what the rest of these guys do when this bill comes back. There are too many cars on Kauai roads.

    1. Doug September 2, 2021 10:41 am Reply

      Voted for him the last time around, very happy with my vote

  4. Jim September 2, 2021 8:34 am Reply

    Tax, Tax, Tax. Blame the tourism industry for everything that’s wrong. Tourists are becoming aware of all the hidden costs, taxes, fees for a vacation to Kauai. Blame the tourists. and tax them to pay for “Free for Residents” won’t always work. Then what will you do? Go back to a rural economy? That sounds so romantic. Until you dig deeper into lowering the standard of living for everyone. With fewer tourists to pay for the Free Stuff what will you do? Kauai isn’t the only tourism driven economy in the USA. Infrastructure has been neglected for decades while the reality of growth was ignored.

    1. Doug September 2, 2021 10:48 am Reply

      We need a balance where tourism is concerned, we do not want to become Oahu. We need higher spending tourists, not the cheap ones. In 2019 we had MORE tourists than past years who SPENT LESS. What we are looking for is tourists who will actually spend money HERE, and the money paid to the big mainland corporations (airfare, rental cars and hotel fees) do not count as spent here. Flying in and spending your money at Costco and your time at a free beach (paid for with my property taxes) is not spending money here. There also needs to be a beach tax, and studies are underway at 3 beaches on Kauai in order to determine how much that should be. Bravo, County Council!

      1. Matt K. September 3, 2021 7:11 am Reply

        Doug, any property that a visitor would stay in also pays property taxes. In fact, if the visitor stays in a legal short-term vacation rental, they are paying 3x the amount of property taxes that you pay. The owners of these properties — I am one — pay triple what resident owners pay. I agree with that generally as locals should get a break, but when I see posts like your it makes me reconsider.
        Also, re your earlier post on traffic during COVID, it was better during the early parts of COVID but at that time almost nobody was driving. There were no tourists and locals were mostly not driving to work. As COVID moved ahead, even when there were still very few tourists, traffic crept back to what I would call heavy. The fact is that during the AM and PM rush hours, most of the traffic is locals. The island layout is not ideal for commuters really, as most end up driving at least part of the total loop to get to and from work. Tourists make it worse but the bulk of it is locals. Aloha!

      2. Tyler James September 3, 2021 2:56 pm Reply

        Doug- less congestion of course is preferred for everyone. With zero tourists you would still have 20,000 more residents than when I first visited. They weren’t all born on Kauai. As long as the gov. that does little to improve infrastructure while encouraging growth can get away with blaming a bogey man they will.

  5. Z September 2, 2021 11:33 am Reply

    Start going after these people who gobble up the prime land for there own personal gain. Who needs 750 plus acres .. how about the beautiful who build these multi million homes n aren’t here all year . Start taxing them not the tourist . I bet u zuckerburg 007 Norris n a few more that have big spreads of land didn’t get taxed correctly wake up county of Kauai raise the realestate taxes on them let them pay there correct cost.

  6. Bobby September 2, 2021 11:42 am Reply

    Kauai “Aloha” = Hate the tourists, love their money. Be careful or people will go elsewhere.

    1. RGLadder37 September 2, 2021 12:07 pm Reply

      That is the idea. Some where else. David Ige wants this to happen. Less tourist.

  7. Kauaidoug September 2, 2021 11:46 am Reply

    If we had public transportation that works in highly tourist trafficked areas like Poipu, Kapaa and Princeville we would cut traffic significantly. Public transit needs to work for workers and visitors and locals to become successful. How bout a bus from the airport to Kealia beach stopping at beaches, hotels and parks?

  8. ByeBye September 2, 2021 12:07 pm Reply

    Really hope they do.

  9. Joe Public September 2, 2021 12:08 pm Reply

    Good! Next time catch the bus so our roads wont be so congested

  10. Kainoa Maltis September 2, 2021 12:19 pm Reply

    I vote for higher taxes for everything tourism. You want to come to Kaua’i and interfere with our life, our beaches, our roads….then you need to pay the price. Or go elsewhere.
    I’m sick of tourists crying how much money they spend and how Hawaii NEEDS their money.

    1. Ashley September 2, 2021 3:33 pm Reply


  11. Al September 2, 2021 2:09 pm Reply

    This tax is a fantastic idea. I am voting for Evslin and Cowden and whomever else backs this bill! Tax tourism profiteers, not the residents!

  12. David September 2, 2021 3:27 pm Reply

    How about raising rental car fees/taxes significantly! and putting the money into transit systems to get the tourists off the roads and road improvements so we can all get around easier. We could sure use some passing lanes between Kapaa and Princeville.

  13. Allan September 2, 2021 6:52 pm Reply

    And when the tourists that support and allow us to live and support our family decide that Kaui is to difficult, and expensive to vacation at, then what? Remember that it is those tourist that sustain the island, like it or not. When those tourist move on it wont take long for the crying for them to come back. Maybe not what you want to admitt, but a plain fact.

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