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TAT hike will hurt tourism

By Staff | May 7, 2009

The Maui County Council recently gained attention for cutting $18 million in transient accommodation taxes (TAT) from its budget as the legislature prepares to use that money to close the deficit in the state’s budget.

Despite the enormous fiscal pressure the state faces, I am strongly opposed to withholding the counties’ share of the TAT to balance the state budget.

Along with property taxes, that is a primary source of revenue for counties, and I agree with Maui officials who are opposed to this method of closing the budget gap.

Our administration has presented multiple budget alternatives that would enable the state to get through the rest of 2009 and the next two fiscal years without cutting vital services, laying off workers or raising taxes.

This is not the time to be withholding the TAT from the counties or raising the hotel room tax. It sends the wrong message.

Since October, Hawaii has been touted as one of the best vacation deals available — a high-quality and unique vacation experience for less than you expect or have paid in the past.

In other words, although Hawaii has been hit hard by the recession and its impact on leisure travel, we have not had to fight the “expensive” tag on top of it.

The increase will be visible to consumers. The higher tax is going to be part of the package price they see before they prepay or book, for example, a vacation on Maui.

Whether travelers book directly with a hotel, purchase an air/hotel package, or go to an online travel agency like Expedia, Orbitz or Travelocity, the TAT will be included in the final price.

All told, an increase in the TAT or hotel room tax is tantamount to an increase in the cost of a Hawaii vacation, which in turn weakens our state’s newly won position as an extraordinary vacation value.