SB 1215: RELATING TO THE TRANSIENT ACCOMMODATIONS TAX.

THE SENATE	S.B. NO.	1215
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII

A BILL FOR AN ACT

 

 

RELATING TO the transient ACCOMMODATIONs tax.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

PART I

     SECTION 1.  The legislature finds that Hawaii's natural resources, including reefs, oceans, forests, streams, estuaries, shorelines, and beaches, provide irreplaceable and invaluable benefits to visitors, residents, and the global community.

     The Hawaii State Constitution makes clear that the State's natural and cultural resources are required to be held in public trust, and therefore, must be managed and protected for the benefit of present and future generations.  The Hawaii State Constitution further requires the State and its agencies to protect and enforce Native Hawaiian rights, including traditional and customary practices associated with, and dependent upon, carefully managed and abundant natural resources.

     The legislature further finds that Hawaii's natural environment faces significant environmental pressure from the heavy use it receives from persons traveling to enjoy the State's natural resources.  The current underinvestment in the State's natural resources poses a significant liability to the visitor industry; the stability of natural systems, including food systems and water quality; and the ecosystems, services, fisheries, economic resilience, and health and safety of the State.

     The legislature notes that the visitor industry is critically important for the State's economy.  In 2019, the visitor industry brought in $17.75 billion in total visitor spending to businesses in Hawaii, generated $2.07 billion in taxes, and supported 216,000 jobs statewide.

     The legislature asserts that the visitor industry should be provided with resources to improve the quality of the visitor experience to sustain the economic benefits to Hawaii, and equally importantly, to synergize tourism with the quality of life for Hawaii's residents.  The visitor industry should move toward regenerative tourism by attracting responsible visitors and implementing solutions to overcrowded attractions and overtaxed infrastructure.  Tourism should be environmentally friendly, culturally sensitive, and synergistic with a high quality of life for the State's residents.

     The beaches of Waikiki provide an example of resources needed to improve the quality of visitor experience.  Waikiki is recognized as Hawaii's primary visitor destination.  In 2018, the Hawaii Tourism Authority found that Waikiki accounts for ninety per cent of all visitor accommodation units on Oahu and nearly half of all units in the State.  Sand beaches are extremely important to the quality of visitor experience.  In 2008, Hospitality Advisors LLC found that more than ninety per cent of visitors considered beach availability in Waikiki as very important or somewhat important.  Sea level rise constitutes a serious threat to the beaches of Waikiki.  The Waikiki beach improvement and maintenance program seeks to restore and improve Waikiki public beaches, increase beach stability through improvement and maintenance of shoreline structures, providing safe access to and along the shoreline and increase resilience to coastal hazards and sea level rise.

     Hawaii residents currently contribute to the protection and management of the State's natural resources through taxes, environmental care, subsistence, cultural practices, and the exercise of the values and practices embodied in the Hawaii State Constitution.  However, with escalating visitor impacts and an increasing global threat to the island ecosystems, there is an immediate need for additional resources to protect, restore, sustain, manage, and conserve Hawaii's natural resources.  A regenerative tourism contribution has been suggested by the Hawaii tourism authority as a means to obtain the necessary resources.

     The legislature believes that a one per cent transient accommodations tax (TAT) increase is necessary to provide the visitor industry with resources to improve visitor experience to sustain the economic benefits to Hawaii.  This one per cent TAT increase could generate the necessary funding each year to offset the adverse impacts of visitors and conserve Hawaii's irreplaceable green infrastructure in perpetuity.

     The legislature further finds that a malama aina visitor impact tax is a type of "green tax" or "environmental protection tax", which have been successfully implemented in many visitor destinations throughout the world, including the European Union, Galapagos Islands, Japan, New Zealand, and Palau.  In these locations, the taxes have demonstrated compounding benefits for visitors, residents, and natural landscapes and seascapes.

     The legislature believes that establishing a malama aina visitor impact tax as a one per cent increase in the TAT in Hawaii would be a significant and effective way to raise additional revenue to offset visitor impacts and ensure a healthy environment for future generations.  A malama aina visitor impact tax provides a reasonable and appropriate way to generate these needed revenues.

     Accordingly, the purpose of this Act is to:

     (1)  Establish a malama aina visitor impact tax program, to be administered by the department of business, economic development, and tourism;

     (2)  Establish a malama aina visitor impact tax special fund to fund the malama aina visitor impact tax program; and

     (3)  Temporarily increase the transient accommodations tax by one per cent and deposit the additional tax revenue into the malama aina visitor impact tax special fund.

     SECTION 2.  Chapter 201, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part     .  MALAMA AINA VISITOR IMPACT TAX PROGRAM

     §201-A  Definitions.  For purposes of this part:

     "Department" means the department of business, economic development, and tourism.

     "Program" means the malama aina visitor impact tax program established in section 201-B.

     "Resident of Hawaii" means an individual who has:

     (1)  Filed or paid state income taxes for the previous tax year; or

     (2)  Established domicile in the State, as evidenced by documentation showing the individual's address, including any of the following:

          (A)  A valid Hawaii driver's license;

          (B)  A valid Hawaii state identification card;

          (C)  A valid school identification card issued by a school in the State; or

          (D)  Any other official document issued to the individual within the last thirty days by a government agency, financial institution, insurance company, or utility company in the State.

     "Special fund" means the malama aina visitor impact tax special fund established pursuant to section 201-C.

     "Visitor" means an individual located in the State who is not a resident of the State.

     §201-B  Malama aina visitor impact tax program; established.  There is established within the department the malama aina visitor impact tax program to allocate funds to state agencies to:

     (1)  Improve the quality of visitor experience to sustain the economic benefits contributed by the visitor industry; and

     (2)  Protect, restore, and manage the State's natural and cultural resources.

     §201-C  Malama aina visitor impact tax special fund; established.  (a)  There is established within the state treasury the malama aina visitor impact fee special fund into which shall be deposited:

     (1)  Appropriations made to the special fund by the legislature;

     (2)  For the period beginning on January 1, 2026, to December 31, 2030, all transient accommodations tax and surcharge on state tax revenues allocated to the special fund pursuant to section 237D-2(f)(1)(B); and

     (3)  Grants, gifts, and donations from public agencies and private persons.

     All interest earned or accrued on moneys deposited in the special fund shall become part of the special fund.

     (b)  The special fund shall be administered by the department with transparency and accountability in a manner that maximizes the effectiveness of the program.

     (c)  Moneys in the special fund shall be expended to:

     (1)  Implement and administer the program, including the development and implementation of a visitor impact fee strategic plan that includes a timetable for the implementation of the objectives and policies of this part; and

     (2)  Be allocated to appropriate state agencies to fund projects that provide resources to the visitor industry, improve visitor experience to sustain economic benefits to Hawaii, help offset adverse environmental impacts caused by visitors, and ensure that the State's natural resources are maintained for continued use by visitors.  Examples of permissible projects under this subsection include the Waikiki beach improvement and maintenance program and projects that directly restore, enhance, and protect, in perpetuity, natural resources and the State's unique and fragile ecological status, including projects that:

          (A)  Protect, restore, or enhance terrestrial and marine natural resources impacted by heavy usage of licensees;

          (B)  Increase the resilience and adaptation of Hawaii's natural resources with environmentally beneficial strategies to reduce the adverse impacts of climate change, including coastal erosion, sea level rise, damage to reefs, ocean acidification, coral bleaching, damage to land resources, and other impacts exacerbated by licensees; or

          (C)  Remove and control invasive species and propagate and plant native species in state-owned recreational areas utilized by licensees.

     (d)  Moneys allocated from the special fund to state agencies pursuant to subsection (c)(2) shall be in addition to and shall not supplant any portion of the base budget of the state agencies.

     §201-D  Report to legislature.  (a)  The department shall submit a report of its findings and recommendations on the program and special fund, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular sessions of 2026, 2027, 2028, 2029, 2030, and 2031.  The report shall include:

     (1)  Status and progress of the program, including how the program:

          (A)  Assisted the visitor industry with resources to improve the quality of visitor experience to sustain the economic benefits to the State;

          (B)  Restored, enhanced, and protected Hawaii's state-owned natural resources and its unique and vulnerable ecosystem during the previous fiscal year, as well as the benefits that have accrued or will accrue from those expenditures for the benefit of the State's natural resources; and

     (2)  An accounting of the receipts of and expenditures from the special fund.

     (b)  The department shall publish the reports submitted to the legislature pursuant to subsection (a) on its website for public access."

PART II

     SECTION 3.  Section 237D-2, Hawaii Revised Statutes, is amended to read as follows:

     "§237D-2  Imposition and rates.  (a)  There is levied and shall be assessed and collected each month a tax of:

     (1)  Five per cent for the period beginning on January 1, 1987, to June 30, 1994;

     (2)  Six per cent for the period beginning on July 1, 1994, to December 31, 1998;

     (3)  7.25 per cent for the period beginning on January 1, 1999, to June 30, 2009;

     (4)  8.25 per cent for the period beginning on July 1, 2009, to June 30, 2010; and

     (5)  9.25 per cent for the period beginning on July 1, 2010, and thereafter;

on the gross rental or gross rental proceeds derived from furnishing transient accommodations.

     (b)  Every transient accommodations broker, travel agency, and tour packager who arranges transient accommodations at noncommissioned negotiated contract rates and every operator or other taxpayer who receives gross rental proceeds shall pay to the State the tax imposed by subsection (a), as provided in this chapter.

     (c)  There is levied and shall be assessed and collected each month, on the occupant of a resort time share vacation unit, a transient accommodations tax of:

     (1)  7.25 per cent on the fair market rental value until December 31, 2015;

     (2)  8.25 per cent on the fair market rental value for the period beginning on January 1, 2016, to December 31, 2016; and

     (3)  9.25 per cent on the fair market rental value for the period beginning on January 1, 2017, and thereafter.

     (d)  Every plan manager shall be liable for and pay to the State the transient accommodations tax imposed by subsection (c) as provided in this chapter.  Every resort time share vacation plan shall be represented by a plan manager who shall be subject to this chapter.

     (e)  Notwithstanding the tax rates established in subsections (a)(5) and (c)(3), the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be 10.25 per cent for the period beginning on January 1, 2018, to [December 31, 2030;] December 31, 2025, provided that:

     (1)  The tax revenues levied, assessed, and collected pursuant to this subsection that are in excess of the revenues realized from the levy, assessment, and collection of tax at the 9.25 per cent rate shall be deposited quarterly into the mass transit special fund established [under] pursuant to section 248-2.7; and

     (2)  If a court of competent jurisdiction determines that the amount of county surcharge on state tax revenues deducted and withheld by the State, pursuant to section 248-2.6, violates statutory or constitutional law and, as a result, awards moneys to a county with a population greater than five hundred thousand, then an amount equal to the monetary award shall be deducted and withheld from the tax revenues deposited under paragraph (1) into the mass transit special fund, and those funds shall be a general fund realization of the State.

     The remaining tax revenues levied, assessed, and collected at the 9.25 per cent tax rate pursuant to subsections (a) and (c) shall be deposited into the general fund in accordance with section 237D-6.5(b).

     (f)  Notwithstanding the tax rates established in subsections (a)(5) and (c)(3), the tax rates levied, assessed, and collected pursuant to subsections (a) and (c) shall be 11.25 per cent for the period beginning on January 1, 2026, to December 31, 2030, provided that:

     (1)  The tax revenues levied, assessed, and collected pursuant to this subsection that are in excess of the revenues realized from the levy, assessment, and collection of tax at the 9.25 per cent rate shall be deposited quarterly as follows:

          (A)  One per cent into the mass transit special fund established pursuant to  section 248-2.7; and

          (B)  One per cent into the malama aina visitor impact tax special fund established pursuant to section 201-C.

     (2)  If a court of competent jurisdiction determines that the amount of county surcharge on state tax revenues deducted and withheld by the State, pursuant to section 248-2.6, violates statutory or constitutional law and, as a result, awards moneys to a county with a population greater than five hundred thousand, then an amount equal to the monetary award shall be deducted and withheld from the tax revenues deposited under paragraph (1)(A) into the mass transit special fund, and those funds shall be a general fund realization of the State.

     The remaining tax revenues levied, assessed, and collected at the 9.25 per cent tax rate pursuant to subsections (a) and (c) shall be deposited into the general fund in accordance with section 237D-6.5(b)."

     SECTION 4.  Section 237D-6.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  Except for the revenues collected pursuant to section 237D-2(e)[,] or (f), revenues collected under this chapter shall be distributed in the following priority, with the excess revenues to be deposited into the general fund:

     (1)  $1,500,000 shall be allocated to the Turtle Bay conservation easement special fund beginning July 1, 2015, for the reimbursement to the state general fund of debt service on reimbursable general obligation bonds, including ongoing expenses related to the issuance of the bonds, the proceeds of which were used to acquire the conservation easement and other real property interests in Turtle Bay, Oahu, for the protection, preservation, and enhancement of natural resources important to the State, until the bonds are fully amortized;

     (2)  $11,000,000 shall be allocated to the convention center enterprise special fund established under section 201B-8;

     (3)  An allocation shall be deposited into the tourism emergency special fund, established in section 201B‑10, in a manner sufficient to maintain a fund balance of $5,000,000 in the tourism emergency special fund; and

     (4)  $3,000,000 shall be allocated to the special land and development fund established under section 171-19; provided that the allocation shall be expended in accordance with the Hawaii tourism authority strategic plan for:

          (A)  The protection, preservation, maintenance, and enhancement of natural resources, including beaches, important to the visitor industry;

          (B)  Planning, construction, and repair of facilities; and

          (C)  Operation and maintenance costs of public lands, including beaches, connected with enhancing the visitor experience.

     All transient accommodations taxes shall be paid into the state treasury each month within ten days after collection and shall be kept by the state director of finance in special accounts for distribution as provided in this subsection."

     SECTION 5.  Section 248-2.7, Hawaii Revised Statutes, is amended to read as follows:

     "§248-2.7  Mass transit special fund; established; distribution of funds.  (a)  There is established a mass transit special fund to be administered by the department of budget and finance.

     (b)  For the period beginning on January 1, 2018, to [December 31, 2030,] December 31, 2025, transient accommodations tax and surcharge on state tax revenues allocated to the mass transit special fund pursuant to sections 237D-2(e) and 248-2.6 shall be deposited into the special fund.  All interest earned on the moneys in the special fund shall be credited to the general fund.  The mass transit special fund shall be exempt from the central service expenses deduction under section 36-27 and departmental administrative expenses deduction under section 36-30.

     (c)  For the period beginning on January 1, 2026, to December 31, 2030, transient accommodations tax and surcharge on state tax revenues allocated to the mass transit special fund pursuant to sections 237D-2(e)(1) and 248-2.6 shall be deposited into the special fund.  All interest earned on the moneys in the special fund shall be credited to the general fund.  The mass transit special fund shall be exempt from the central service expenses deduction under section 36-27 and departmental administrative expenses deduction under section 36-30.

     [(c)] (d)  Upon receiving a certification statement from the comptroller pursuant to section 40-81.5, the director of finance shall allocate and disburse moneys in the mass transit special fund to the director of finance of a county with a population greater than five hundred thousand; provided that the director of finance shall only disburse those amounts that are certified in the certification statement for that county for the purposes specified in section 46-16.8; provided further that revenues allocated from the special fund shall not be used for:

     (1)  Operating or maintenance costs of the mass transit project or any purpose not consistent with section 46‑16.8(f); or

     (2)  Administrative, operating, marketing, or maintenance costs, including personnel costs, of a rapid transportation authority charged with the responsibility for constructing, operating, or maintaining the mass transit project;

provided further that the total amount of funds that are available, allocated, and disbursed by the director of finance pursuant to this section shall not be in excess of the total amount indicated on the certification statement.  The director of finance may allocate and disburse moneys pursuant to this section on a monthly basis.

     Any amounts allocated and disbursed pursuant to this section shall be subject to the availability of funds deposited and on balance in the special fund.  The director of finance shall not allocate or disburse any amounts from the special fund that are in excess of any amounts deposited and on balance in the special fund.

     [(d)] (e)  The director of finance shall post all certification statements received from the comptroller pursuant to section 40-81.5 on the department of budget and finance's website within ten working days of payments made pursuant to this section.

     [(e)] (f)  The department of budget and finance shall submit an annual report to the legislature not later than twenty days prior to the convening of each regular session on the total amount of funds allocated pursuant to this section.

     [(f)] (g)  The director of finance may establish rules, exempt from chapter 91, for the purposes of this section."

PART III

     SECTION 6.  In codifying the new sections added by section 2 and referenced in section 3 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

     SECTION 7.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 8.  This Act shall take effect upon its approval; provided that sections 3, 4, and 5 of this Act shall take effect on January 1, 2026; provided further that on December 31, 2030, this Act shall be repealed and sections 237D-2, 237D-6.5, and 248-2.7, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act.

 

INTRODUCED BY:	_____________________________

 

 

 

Report Title:

DBEDT; TAT; Malama Aina Visitor Impact Tax Program; Malama Aina Visitor Impact Tax Special Fund; Reports

 

Description:

Establishes the Malama Aina Visitor Impact Tax Program within the Department of Business, Economic Development, and Tourism to allocate funds to state agencies to improve the quality of visitor experience to sustain the economic benefits contributed by the visitor industry and protect, restore, and manage the State's natural and cultural resources.  Establishes the Malama Aina Visitor Impact Tax Special Fund to fund the program.  Increases the transient accommodations tax by one per cent from 1/1/2026 to 12/31/2030 and requires the additional tax revenues to be deposited into the Special Fund.  Requires the Department to submit annual reports to the Legislature.  Repeals 12/31/2030.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.