2019-02-20 Letter to Donovan M. Dela Cruz and Gilbert S.C Keith-Agaran SB 198, SD 1 Relating to the Transient Accommodations Tax (Authorizing a County Surcharge on the TAT)

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Harry Kim Mayor County of Hawai i Office of the Mayor Wil Okabe Managing Director Barbara J. Kossow Deputy Managing Director 25 Aupuni Street, Suite 2603 • Hilo, Hawaii 96720 • (808) 961-8211 • Fax (808) 961-6553 KONA: 74-5044 Ane Keohokalole Hwy., Bldg C • Kailua-Kona, Hawai'i 96740 (808) 323-4444 • Fax (808) 323-4440 February 20, 2019 Senator Donovan M. Dela Cruz, Chair Committee on Ways and Means Senator Gilbert S.C. Keith-Agaran, Vice Chair Committee on Ways and Means Dear Chair Dela Cruz, Vice Chair Keith-Agaran and Committee Members: RE: SB 198, SD1 Relating to the Transient Accommodations Tax (Authorizing a County Surcharge on the TAT) Thank you for the opportunity to testify in support of SB 198, SD1, which would authorize each County to impose a surcharge on the State's transient accommodations tax. We appreciate the innovative approach this bill bring to the table, and the recognition of the counties as partners in the affairs of Hawaii governance. We do not shy away from the responsibilities that this bill would place on the counties to raise their own revenue, and appreciate that the State would still "levy, assess, collect, and otherwise administer the county surcharge," because it would be wasteful and prohibitive for each County to set up parallel structures. The most important provision of SB 198, SD1, for which we are most appreciative, is that "This surcharge on transient accommodations tax shall not affect the amounts remitted to a county under section 237D-6.5." This is in marked contrast to other bills that are circulating (e.g., HB 631 and SB 1376) which would eliminate the annual allocation to the counties of $103M. Having recognized the benefits of SB 198, SD1 we still do have two concerns. First, the bill provides that "...in the case of a person engaged in the business of furnishing transient accommodations in more than one county, the taxpayer shall determine, through apportionment or other means, that portion of the surcharge on transient accommodations tax attributable to business conducted in each county." This seems to allow each taxpayer potentially to choose that jurisdiction which imposes the lowest surcharge. That surely is not what is intended, and we ask that language which was changed between SB 198 and SB 198, SD1 be restored: "...in the case of a person engaged in the business of furnishing transient accommodations in County of Hawai`i is an Equal Opportunity Provider and Employer.