Hawaii Timeshare Tax Is Saved By The Bell – For Now May 21, 2011
Posted by John Stephens in : ARDA, Hawaii timeshare, News & Events , add a commentHawaii timeshare owners have dodged a legislative bullet during this year’s state legislative session as controversial language that would have increased taxes on timeshare owners by 300% was removed from bills recently passed by the Hawaii Senate and House of Representatives.
Hawaii Governor Neil Abercrombie had stated earlier this year his desire to increase the amount of taxes levied on Hawaii timeshare owners in an attempt to help close a budget shortfall faced by the state. However, an outcry of protest from timeshare owners, developers, resort managers and other members of the hospitality industry led to legislators removing the language from bills which passed just prior to the close of the 2011 session.
While this is good news for the timeshare industry from a state-wide perspective, industry observers are concerned that the state has kicked the can down to the local level through language included in those bills that could motivate action on a county level to raise taxes.
According to the American Resort Development Association, the legislation “did include one particular tax related item that might have an indirect effect on timeshare owners on a county level. The legislature placed a cap on the overall amount of transient accommodation tax revenues that are normally shared with the counties. This means that local governments could have an additional incentive to raise revenues, particularly property tax revenues.”
Talk has surfaced in the Maui County Council about raising the tax rate for owners in their jurisdiction, as I blogged about last month. During a May 6 hearing, representatives of the timeshare industry voiced their concerns to the Council about their proposal, according to a report in the Maui News.
“We believe time shares pay their fair share of taxes,” said Jason Gamel of the American Resort Development Association, who added that there appeared to be “no rationale” as to why timeshares were separated from hotels in the property tax system in 2005. Gamel said the county appeared to set a higher rate for philosophical reasons, according to the report.
During the hearing, Council Member Don Couch disagreed with the statements, noting that county officials in 2005 said they wanted to increase property tax rates for timeshares because they pay less in hotel-room taxes than traditional hotels. He noted that finance officials at the time said the rate should be set at $21 in order to balance out the loss of revenue to the county but that they wanted to go with a lower rate because they judged it would be more fair. The current rate is $14 and the proposed increase would raise the rate to $15.45 per $1,000 of assessed value.
This issue is certain to be contested by the industry should it pass, as I’m sure that local officials in other counties and municipalities in Hawaii are watching this closely to see if they can also get away with increasing rates.
The statement by Couch shows once again the misconception that elected officials often have about timeshare, mistakenly using an apples-to-oranges comparison to hotels that does not fully consider the ownership aspect of timeshare.
Or, perhaps those officials are conveniently overlooking (and taking for granted) the fact that timeshare owners pay property taxes in their maintenance fees and, unlike hotel occupants who pay accommodation taxes only when they visit, timeshare owners can’t say no to this payment by not visiting the island.
I’m just sayin’….
This issue is scheduled to come to a head at a special County Council meeting on Monday, May 23 when the Council gathers to vote on setting property tax rates for the 2012 fiscal year.
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