Hawaii Senate Passes Bill to Increase Tourist Tax for Climate Change Mitigation
The Hawaiian Senate has approved Senate Bill 1396, a measure designed to combat climate change by increasing the tax levied on tourists staying in hotels across the state. This landmark legislation aims to generate additional revenue to fund initiatives focused on climate mitigation, adaptation, and overall resilience against the growing impacts of a changing environment.
The bill outlines a phased approach to the tax increase. Beginning on January 1st, the tax on Hawaii hotel stays will rise to 11%. The following year, it will further increase to 12%. The anticipated surge in revenue will be strategically allocated to two key funds: the Climate Mitigation and Resiliency Special Fund and the Economic Development and Revitalization Special Fund.
The Climate Mitigation and Resiliency Special Fund is earmarked for projects that directly address the challenges posed by climate change. These projects encompass a wide array of activities, including efforts to mitigate the effects of climate change, adapt to unavoidable changes, and enhance the overall resilience of the state against climate-related disasters. This fund may also be utilized to secure the expertise of consultants and to support personnel dedicated to these critical endeavors.
Lawmakers have emphasized the urgent need for this legislation, citing the scale and impact of the climate emergency facing Hawaii. They assert that the state must make significant investments in proactive measures to prepare for, mitigate, and adapt to the consequences of climate change. This includes building resilience against the increasing frequency and intensity of natural disasters.
The devastating wildfire that swept through Lahaina in August 2023 serves as a stark reminder of the vulnerability of the islands. This tragic event resulted in the loss of 101 lives and caused over $5 billion in damages. The fire, attributed to electric equipment damaged by high winds, highlighted the critical need for enhanced infrastructure and disaster preparedness.
Hawaii is believed to be the first state in the United States to implement such a measure. The legislature acknowledges the importance of protecting Hawaii’s delicate ecosystems for future generations, which is a major attraction for visitors worldwide.
Beyond the new hotel tax increase, Hawaii already imposes a 10.25% tax on short-term rentals. The counties within Hawaii add their own 3% surcharge on top of the state’s tax. Furthermore, a combined rate of nearly 5% is applied to goods and services, resulting in a total duty of nearly 19% on many purchases. These existing taxes have sparked debate about the potential impact on tourism and the overall cost of visiting the islands.
State Representative Adrian Tam voiced his strong support for the bill. He emphasized the importance of protecting the residents and communities of Hawaii. He argued that as Hawaii continues to welcome visitors, it is essential to ensure that adequate funding is allocated to safeguard the state’s delicate ecosystems.
In 2023, Hawaii welcomed 9.6 million visitors, according to the Hawaii Tourism Authority. The influx of tourists contributes significantly to the state’s economy, but it also places a strain on resources and infrastructure. The new tourist tax aims to balance the economic benefits of tourism with the need to address the environmental challenges facing the islands.
Gov. Josh Green (D) has indicated his intention to sign the bill into law. This endorsement underscores the widespread support for the measure and its potential to make a significant impact on Hawaii’s climate resilience efforts. The governor’s office and the Hawaii Tourism Authority were contacted for additional comments regarding the bill and its anticipated effects.
The passage of Senate Bill 1396 represents a bold step towards addressing climate change in Hawaii. By increasing the tourist tax, the state is seeking to generate the financial resources necessary to invest in projects that will protect the environment, enhance resilience, and ensure a sustainable future for the islands. While the potential impact on tourism remains a topic of discussion, proponents of the bill argue that the long-term benefits of climate mitigation and adaptation outweigh any potential short-term economic concerns. The bill is aimed at balancing tourism and economic sustainability with the needs and priorities of its local population and the health of the land itself. The additional revenue hopes to protect the natural resources and the people of Hawaii.
