HomeMy WebLinkAbout2019-02-06 Letter to Clarence Nishihara & Glenn Wakai re SB 198 - TAT :.P.• .^ Wil Okabe•
Managing Director
Harry Kim
Mayor
Barbara J. Kossow
?i• p or-N'�� .' Deputy Managing Director
County of Hawaii
Office of the Mayor
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, Hawaii 96740
(808)323-4444 • Fax(808)323-4440
February 6, 2019
Senator Clarence K. Nishihara, Chair
COMMITTEE ON PUBLIC SAFETY, INTERGOVERNMENTAL, AND MILITARY
AFFAIRS
Hawaii State Legislature
Senator Glenn Wakai, Chair
COMMITTEE ON ENERGY, ECONOMIC DEVELOPMENT, AND TOURISM
Hawaii State Legislature
Dear Chairs Nishihara and Wakai, and Committee members:
RE: SB 198, RELATING TO THE TRANSIENT ACCOMMODATIONS TAX
(authorizing a County surcharge on the TAT)
Thank you for the opportunity to testify on SB 198, 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, 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, we do have to express concerns.
First, the bill provides that "(f) The taxpayer shall designate the taxation district to which
the county surcharge on transient accommodations tax is assigned..."
County of Hewer'is an Equal Opportunity Provider and Employer
C. Nishihara & G. Wakai
SB 198 — TAT
February 6, 2019
Page 2
This seems to be boilerplate language (and appears in HB631 and SB 1376 as
well) but it would seem to allow each taxpayer to choose that jurisdiction which imposes
the lowest surcharge. That surely is not what is intended, and we ask that it be clarified.
Elsewhere in the bills it states that "the director of taxation shall have the exclusive
rights and power to determine the county or counties in which a person is engaged in
the business of furnishing transient accommodations and, in the case of a person
engaged in the business of furnishing transient accommodations in more than one
county, the director shall determine, through apportionment or other means, that portion
of the surcharge on transient accommodations tax attributable to business conducted in
each county." If this supersedes the taxpayer choice, perhaps that could be spelled out
in a more definitive way.
Second, and from an admittedly selfish point of view, we have to recognize that
under the present TAT formula, Hawaii County gets an enhanced share of the TAT
revenue that flows to the counties. Given our land mass and more difficult economic
condition, the existing formula for dividing TAT among the counties has been seen as
fair and just, and has stood the test of time.
We have not been able to calculate how much revenue could be generated if a
new County TAT surcharge were limited to 2%, as SB 198 provides, but it follows that
the value of the 2% option would be more of a concern in Hawaii County than in others.
Therefore we would ask that a higher cap be considered as this bill makes its way
through the legislative process.
Sincerely,
/ 1
Harry Ki
Mayor
County of Hawaii is an Equal Opportunity Provider and Employer