Hawaii vacations may get more expensive with new Honolulu hotel tax

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HONOLULU — Honolulu has become the latest Hawaii county to adopt its own hotel tax after Mayor Rick Blangiardi signed legislation adding a 3% surcharge to the state’s levy on short-term rentals.

Officials estimate the new tax, paid for by guests staying at accommodations such as hotels and Airbnbs, could generate about $86 million a year for Oahu, the Honolulu Star-Advertiser reported.

The surcharge will be imposed on top of the state’s 10.25% tax on gross rental proceeds from hotels, vacation rentals, timeshares and other transient accommodations.

Honolulu plans to allocate 58% of the tax’s revenue to the general fund, about 33% to rail and about 8% to a special fund for natural resources.

Kauai, Maui and Hawaii counties have already adopted the surcharge.

The counties acted after the state Legislature this year stopped a sharing portion of the state tax with them. The counties used to collectively receive about $130 million of the state’s transient accommodations tax revenue annually. Honolulu County received 44%, or about $45 million, of the total.

The measure passed by lawmakers allows counties to recoup funds by implementing their own tax.

The Honolulu City Council passed the bill in a 6-3 vote earlier this month. Council members Heidi Tsuneyoshi, Augie Tulba and Carol Fukunaga voted against it because it allocated funds to the city’s rail project.

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