Proponents of such a tax say time-share participants are no different than hotel visitors except that they pay in advance for their rooms. But this argument overlooks the fact that time-sharers are owners, not renters. They own a share of the apartment, which gives them the right to use it but on a different basis from short-term renters of hotel rooms. They pay a portion of the property taxes and are subject to experiencing profits or losses should they sell their shares.
This proposal would tax people for using their own property. To subject time-sharers to a tax that was not imposed on other property owners could result in lawsuits. An attorney who has represented time-share developers contends that such a tax would violate the equal protection clauses of the U.S. and state constitutions.
In practical terms, the tax would also have a chilling effect on the time-share industry in Hawaii, opening the possibility that national time-share companies would exclude Hawaii from their promotions. This would not help the state economy.
The Hawaii Hotel Association supports the tax proposal, but that is hardly surprising since the time-share industry is a competitor. Legislators have to take a broader view.
Raising taxes to meet the state budget shortfall is not a good idea, certainly not when the economy is still trying to recover from recession. That is particularly true of a tax that could run afoul of constitutional guarantees.
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