Hawaii lawmakers eager to gather tax revenue from the state’s flourishing, yet mostly unpermitted, vacation rental sector on Tuesday passed legislation that would require websites like Airbnb to collect and pay taxes on behalf of short-term rental hosts. File photo by THE ASSOCIATED PRESS

Hawaii lawmakers pass vacation-rental tax legislation

HONOLULU — Hawaii lawmakers eager to gather tax revenue from the state’s flourishing, yet mostly unpermitted, vacation rental sector on Tuesday passed legislation that would require websites like Airbnb to collect and pay taxes on behalf of short-term rental hosts.

The state House and Senate both approved separate bills on Tuesday. Senators and representatives are expected to meet later this month to discuss differences.

Attempts to enact similar measures have failed in Hawaii in past years, but lawmakers believe they have a better chance of succeeding this time.

Many Hawaii vacation rentals are operated illegally, making tax collection more challenging. The transient accommodations and general excise taxes the short-term rental operators must pay are levied by the state.

The necessary permits for short-term rentals are issued by counties, which have varying regulations that are often poorly enforced. Honolulu, the most populous county, has not issued new permits since 1989. It’s estimated to have 800 legal vacation rental and bed-and-breakfast units and about 10 times as many illegal ones.

Vacation rentals are increasingly popular with travellers. But critics say they disrupt residential neighbourhoods and exacerbate Hawaii’s acute housing shortage.

States across the country vary as to whether short-term rental owners pay taxes or whether websites collect the taxes on behalf of hosts.

Rep. Richard Onishi, chairman of the House tourism committee, said Hawaii’s four main counties are making progress in crafting laws and rules to better regulate vacation rentals. The state’s role, he said, is to make sure government is getting its tax revenue.

“We’re trying to capture the taxes from people that are doing the business in Hawaii. Which is the state’s responsibility,” said Onishi, a Democrat representing Hilo and Volcano.

Major vacation rental platforms object to both bills, saying they require turning over the personal information of site users in violation of federal law.

Expedia Group, which owns HomeAway.com and VRBO.com, said in a statement that the legislation also threatens Hawaii’s tourism economy.

Airbnb said in written testimony that the purpose of any tax bill should be to help sure the assessment, collection and payment of taxes and “not to use confidential tax information to facilitate the Department of Taxation’s enforcement of county land use laws.”

Hotel owners have been clamouring for a vacation rental tax collection mechanism for years, said Mufi Hannemann, the president of the Hawaii Lodging and Tourism Association. “We want a level playing field. If we’re paying taxes, if we’re paying fees, we want them to do the same,” said Hannemann, whose group’s members operate 50,000 hotel rooms across the state.

Lawmakers passed legislation several years ago similarly requiring vacation rental platforms to collect taxes on behalf of hosts. But Gov. David Ige vetoed the bill, saying he was concerned it would encourage the growth of illegal rentals lacking county permits.

Ige spokeswoman Jodi Leong said the governor is withholding comment on the bills until they undergo a formal legal and departmental review.

But state Sen. Glenn Wakai said he has been consulting Ige’s chief of staff along the way, and he’s receptive to what the Senate has been doing. Onishi said he has been working with the state Department of Taxation and Attorney General’s office to make sure the House’s legislation doesn’t violate federal law and will work for tax officials.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Trudeau caught in middle of clash over energy, environment, Indigenous demands

OTTAWA — The competing demands of natural resource development, environmental protection and… Continue reading

A rare miss for Walmart to end the year

NEW YORK — Walmart reported disappointing fourth-quarter profits and sales after a… Continue reading

Air Canada expects hit in Q1 of 2020 due to novel coronavirus and MAX grounding

MONTREAL — Air Canada says its first quarter is expected to be… Continue reading

Flight to evacuate Canadians from cruise ship ‘expected’ to depart Japan on Thursday

Canadians stranded on a quarantined cruise ship were told that a flight… Continue reading

Recollections of well-known families in Red Deer

Past and present families recognized on Family Day

Your community calendar

Feb. 19 A Liberation of Holland event is being held at the… Continue reading

Reader’s opinion: Here’s how Premier Kenney can build a stronger Alberta

Apparently, the UPC government has decided that most seniors should pay more… Continue reading

Canada’s Auger-Aliassime returns to top 20 after reaching Rotterdam final

Canada’s Felix Auger-Aliassime returned to the top 20 in the world rankings… Continue reading

Canadian teams looking strong at world junior curling championship

KRASNOYARSK, Russia — Winnipeg’s Jacques Gauthier posted two victories at the world… Continue reading

Canadian Weinstein accuser draws strength from #MeToo community, regardless of verdict

For years, Montreal actor Erika Rosenbaum says, she was harbouring a “secret”… Continue reading

‘Schitt’s Creek,’ ‘Anne with an E’ lead Canadian Screen Awards pack

TORONTO — It will be a celebrated ending for “Schitt’s Creek” and… Continue reading

Tournament of Hearts veteran skip Kerry Galusha curls through pain

MOOSE JAW, Sask. — If Kerry Galusha is skipping Northwest Territories at… Continue reading

Andrew Mangiapane scores first hat trick, leads Flames over Ducks 6-4

Flames 6 Ducks 4 CALGARY — Andrew Mangiapane was front and centre… Continue reading

Most Read