HONOLULU -- The Hawaii House of Representatives passed a bill that
will force travel wholesalers to pay the state's 7.25% hotel room
tax on the retail rate they pass on to customers rather than the
discounted rate they negotiate with hotels.
The bill now goes to the Hawaii Senate. If signed into law, it
will bring an additional $30 million to $45 million to the state,
according to legislators.
Debate over the bill on the House floor was intense, heightened
by allegations that the bill was the work of a hotel union seeking
to punish Ed Hogan and his company, Pleasant Hawaiian Holidays, for
fighting the union over pay raises at the Royal Lahaina Resort on
Maui, which Hogan owns.
Democratic Rep. Ed Case said the bill is bad because its
intention is to punish Pleasant Hawaiian.
"This bill arose out of a labor dispute between the labor union
and the hotel owner, who also happens to be the largest wholesaler
in the state," said Case. "This labor dispute continues to this
day, and this bill is a misuse of the legislative process."
Rep. Dwight Takamine, a Democrat and author of the bill, argued
that the bill will not "scare off tourists due to increases in
package tour prices," as other representatives had charged, nor
will it cause the state to lose its competitive advantage to other
"The increase on a tour because of this bill will be 1% to 3%,
which is an insignificant amount," he said.
In the past, every time the state room taxes have gone up in
Hawaii, the state has had a corresponding increase in visitor
numbers, said Takamine. He said the tax revenue the law will bring
to the state is for the greater good of Hawaii.
"Those who came to talk against this bill in the hearings came
to protect a narrow special interest," he said.
Another Democratic House member, Jerry Chang, argued that the
bill isn't a tax hike but merely "closes a loophole for those who
are escaping it. More and more visitors are going through
wholesalers, and if you multiply the loss to the state in tax
revenues by the increased number of people using wholesalers, the
potential for abuse is huge."
ASTA opposes the bill, saying agents, not just wholesalers,
would get hurt when they book groups of clients in hotels and
receive a discount.
"The result would be that agencies and wholesalers would pay
between $29 million and $45 million per year in additional taxes,"
the Society said in a statement.