Advertisement - Click to support our sponsors.

ILWU tips lawmakers
to what may be a hole
in state's tax take

The union says hotel wholesalers
take advantage of a loophole in
the transient accommodations tax

---

By Richard Borreca
Star-Bulletin

State lawmakers, interested in pulling in as much revenue as possible without raising taxes, are looking at a proposal from the ILWU to plug a hotel tax loophole.

Representatives of the union said yesterday in a news conference at the state Capitol that hotel wholesalers, such as Pleasant Hawaiian Holidays, have been taking advantage of a legal loophole in the transient accommodations tax that results in the state's losing as much as $45 million a year in taxes.

The International Longshoremen's and Warehousemen's Union is negotiating a new contract for 300 workers at the Royal Lahaina Hotel, owned by Pleasant Hawaiian Holidays. ILWU officials said they discovered the possible loophole while researching the hotel's owners and finances.

Yesterday, Sen. Brian Taniguchi, (D, Manoa), chairman of the Ways and Means Committee, said his committee will look at ways to close the loophole.

"We have to see first if this is a problem and then how to remedy it," Taniguchi said. "We have to make sure the state is getting all the revenue it should."

Pleasant Hawaiian was unavailable for comment.

Murray Towill, president of the Hawaii Hotel Association, doubted that the tax charges could be $45 million, noting that the entire yearly hotel room tax is between $160 million and $175 million.

He added that if the loophole is closed it would result in higher room rates for hotels.

State Tax Director Marie Okamura researched the issue when the ILWU brought it up, but the administration has not yet adopted a position on it. She said the wholesalers are following the law and paying the proper amount of taxes, but there is a difference between paying the hotel room tax on the wholesale rate compared to the full room price.

Eusebio Lapenia Jr., ILWU president, said that when a wholesaler rents a block of rooms from a hotel at a steep discount, it then resells the rooms to tourists at a higher rate. But the transient accommodations tax is paid on the discounted rate, not the rate charged to the tourists.

"This bill would require wholesalers to pay their fair share as do hotels and everyone else in the industry," Lapenia said.

---

Legislature Directory
Legislature Bills & Hawaii Revised Statutes