Don’t increase TAT to fund rail project

August 21, 2017

"Star-Advertiser / 2013 The Outrigger Waikiki on the beach hotel in Waikiki, Honolulu."

Honolulu Star Advertiser
Editorial by Bob Berges, Stephanie Nojima and Barbara Campbell
August 20, 2017

We speak for our almost 4,000 fellow employees of Outrigger Hotels Hawaii throughout Hawaii and beyond. We and our visitor industry’s some 200,000- strong ohana and our many partners work hard every day to keep visitors visiting us and remain Hawaii’s economic foundation.

We join our industry family in opposing any further increase to the transient accommodations (hotel room) tax — the TAT — for any reason, including Oahu rail funding.

We firmly believe that:

1: Any further increase will harm Hawaii tourism. Hawaii is already one of the world’s most expensive destinations, and piling still more expense on visitors with many vacation choices will only drive them elsewhere.

2: Recent arrival and spending growth have pressed visitor budgets and have not increased profits. Industry costs in construction, goods, services and especially taxes and regulation have escalated as fast or faster than visitor revenue growth.

3: We have already been hit with possibly the largest tax increases in state history. In just the last five years, our TAT taxes have gone from $324 million to $508 million per year and our real property taxes from $196 million to $300 million per year, more than 10 percent each and every year.

4: Virtually none of that huge total $526 million TAT increase has gone to the TAT’s purposes of marketing Hawaii tourism, funding the Hawai‘i Convention Center and aiding the counties with visitor impacts. Instead, we must pay far more for destination marketing and county taxes.

5: We and our visitors also pay the state general excise tax (GET) like everyone else, except close to another $1 billion a year.

6: The TAT is not just a tax on visitors who don’t vote here. Visitors do vote: with their feet or one click online. And a tax on visitors is indirectly a tax on our ohana and partners.

7: There is no good reason to single out Hawaii tourism. Why not just as easily surcharge Hawaii bankers, Realtors, farmers, health care or any other group for rail? Why is it fair to surcharge just us?

8: The TAT is not the stable and predictable funding source required by the federal government to further fund rail. It is volatile, swinging up or down with local, national and world events. Plus, the forecasts for continued TAT revenue growth used to justify rail funding are unrealistic and highly risky.

9: Further revenues from our industry can be derived by fully regulating and taxing the shadow alternative vacation unit industry proliferating throughout Hawaii through Airbnb and others. These units and companies do not play by the same rules as the legal industry, and, because they compete unfairly with us, depress our taxable revenues.

10: It is unfair to increase the TAT on our neighbor island industry to pay for Oahu rail.

We are as dismayed as anyone with Oahu rail’s cost escalation and the massive revenue diversion from other needs. But if rail needs further funding, it should come exclusively from extending the current Oahu GET surcharge.

The GET — because it is so broad-based, dependent on no one industry, shared by visitors and stable — is the fairest and least burdensome tax on all. That is why the Honolulu Authority for Rapid Transportation and all Hawaii counties support the GET surcharge extension.

We are equally disturbed that some state leaders appear to play Russian roulette with Hawaii’s economic engine. They and we have been lucky so far, but that means nothing for the future.

We must keep risk down and avoid the avoidable, not struggle back from some cliff bottom. Hawaii tourism has had a good run for all, and we are committed to keeping the run going.

Bob Berges, Stephanie Nojima and Barbara Campbell are the chairman, secretary and treasurer of the Outrigger Hotels Hawaii Political Action Committee.