Honolulu hotel
taxes rate low

Visitors to Oahu pay less than
in most other cities,
a survey shows

By Russ Lynch
Star-Bulletin

Despite a widely held worry that Hawaii is over-taxing its tourists, a report shows that most major cities in the United States pile a bigger tax load on visitors than Honolulu does.

A report from the Travel Industry Association of America, released today, shows that only three cities out of 50 surveyed have lower hotel room taxes than Honolulu. Many of the cities charge more than 14 percent, with Houston levying highest tax at 17 percent, according to the survey.

TIA calculated Hawaii's total hotel room tax at 10 percent, by combining the current 6 percent transient accommodations tax with the 4 percent general excise tax. Even when Ha-waii's room tax goes to 7.25 percent on Jan. 1, Honolulu still will be charging a lower room tax than 36 other cities when the general excise tax is included, according to current TIA figures.

Furthermore, most cities have sales taxes that are higher than Hawaii's 4 percent general excise tax. The TIA survey looked at what tourists pay in taxes when they dine out at restaurants and Honolulu came in near the bottom of the list. Only Portland, Ore., which has no tax at that level, came in lower. Minneapolis, Norfolk, Va., and Washington topped the list, each charging a 10 percent tax.

Every other city had a higher tax on rental cars than the 4 percent general excise tax in Honolulu, which is most often charged at 4.17 percent because businesses have to pay tax on the tax. Seattle charges an 18.3 percent tax on rental cars. Chicago charges 18 percent. A majority of the cities surveyed, 33 of the 50, charge rental car companies a concession fee to operate at their airports and over the past year most have begun to pass that on to rental customers. Honolulu doesn't. Only three cities have lower gasoline taxes than Honolulu, the survey said.

The Washington-based association said its purpose in running the annual survey is to point out just how much tourists pay in taxes and to caution that such tax money should be used for purposes that benefit tourism.

TIA said that at least 13 cities are dedicating part of their hotel room tax revenues to build or maintain sports facilities, which TIA does not consider a tourism-related expense.

"In no way are we suggesting that travelers should not pay some local taxes in the cities they visit," said William S. Norman, TIA president and chief executive officer. "In fact, we strongly support the idea of tourists helping to support local law enforcement, recreation and other important services." But he said some cities do a much better job than others in using the tax money to benefit travelers.