Proposal aims to increase hotel room tax by 2%

The record-breaking tourism industry has the Honolulu Mayor and the governor asking for a bigger piece of the pie. On Monday, they asked the state legislature to raise the hotel room tax.

Currently, visitors pay a tax on their hotel room rates. It’s called the Transient Accommodation Tax, or TAT. Mayor Kirk Caldwell and Gov. Neil Abercrombie want it raised.

Visitor numbers are setting new records but the amount of tax dollars that the counties are receiving from tourism has a cap of $93 million a year. Mayor Caldwell points out that Oahu got $41 million of that. But the city spent $74 million on services for tourists like police protection, park maintenance, and bus services.

"That means anyone who lives on this island is helping subsidize our visitors in Waikiki and a few other places and I ask is that fair?," Mayor Caldwell said.

Legislators raised the rate from 7.25 percent six years ago to the current 9.25 percent.

Gov. Abercrombie and Mayor Caldwell propose hiking it another two percent.

But the hotel industry is asking that it be lowered, back to what it was six years ago.

"Utility costs have gone up 41 percent. Our payroll has gone up 28 percent, our health and welfare costs have gone up 20 percent," said Max Sword, Outrigger Hotels.

The Hawaii Tourism Authority says that extra two percent means each visitor would pay an extra $50 per visit, which is significant in an industry that’s highly competitive.

"Right now is the time to keep our momentum and raising our taxes I think is not the way to go. I think what we should be doing is trying to continue to grow our brand and grow our markets around the world," said Mike McCartney, Hawaii Tourism Authority.

Visitors we spoke with have mixed feelings about the proposal.

"I think it’s fair. It’s going to a good place, it’s not gonna affect me personally as in whether I choose to come here," Canadian visitor Jef Neufeld said.

The extra cost though might just be enough to drive them away.

"We decided to default to Waikiki since we’ve done it for five straight years, maybe next year we go somewhere different if it’s cheaper for sure," Canadian visitor Jeff Clarke said.

The House Tourism Committee did not vote on the proposal on Monday. For now, the hotel room tax stands at 9.25 percent.