It just got a little more expensive to stay in a hotel or vacation rental in Maui County. Bill 101- creating a 3% transient accommodations tax, unanimously passed the Maui County Council on October 1st. The MCTAT is levied at a rate of 3 percent on every taxpayer that has taxable gross short-term rental proceeds and/or total fair market rental value attributable to the County of Maui. The MCTAT is imposed in addition to the State TAT, which is currently levied at a rate of 10.25 percent.
Maui’s Mayor and County Council felt this was a necessary step. In the Maui News, Mayor Victorino stated: “We did not want this bill, but the state legislature left us no choice when they voted to take the county’s share of the TAT revenue from the state budget,” said Mayor Victorino. “The county spent a great deal to provide services to our visitors with the TAT revenue. It is one of the main ways we fund these services.”
“We also want to thank the County Council for the delay of the start of the collection of the new tax to Nov. 1, to allow both the hospitality industry and the county enough time to prepare,” said Mayor Victorino.
Council Vice-Chair Keani N.W. Rawlins-Fernandez issued a press release about the MCTAT. She noted that on July 6, the state legislature overrode the governor’s veto to enact Act 1, opening the door for counties to collect their own TAT.
“Today our county walked through that door, and exercised our right to collect county TAT in lieu of the state collected TAT we were stripped of and hadn’t received since the beginning of the pandemic,” said Rawlins-Fernandez.
According to Rawlins-Fernandez, county officials estimate the new tax will generate about $15 million in the current fiscal year.
Bill 101 (2021), Draft 1, establishes a 3% county transient accommodations tax on all gross rental, gross rental proceeds and fair market rental value considered taxable under the definitions of Section 237D-1, Hawaiʻi Revised Statutes.
According to Rawlins-Fernandez, the state has consistently lowered the portion of TAT revenue allocated to the counties. “The state repeatedly lowered the rate of distribution over the ensuing decades. The counties received less than 15% in fiscal year 2019.”
“Each of Hawaiʻi’s four counties are working on legislation to create their own Transient Accommodations Tax. We all recognize how vital this tax can be to helping us leverage the visitor industry, address the impacts of tourism, and improve quality of life for all of our residents,” she said.
“In anticipation of the new tax, the council also passed on first reading today, a bill to increase anticipated revenue for the Open Space, Natural Resource, Cultural Resource, and Scenic View Preservation Fund, Affordable Housing Fund, and Economic Development and Cultural Programs Revolving Fund,” said Rawlins-Fernandez.
“One thing that I particularly look forward to is having a Hawaiian Cultural Center in every district. Putting additional revenues into these funds will help ensure we are allocating the county’s money to best serve the needs of our local communities,” she said.
Rawlins-Fernandez pointed out the county “bears the burden” of providing many tourism-related services, such as public safety, parks and roads.
Mayor Victorino also said the MTAT will help support emergency services which are provided to visitors through Ocean Safety and the Fire Department.