STAND. COM. REP. NO. 215

Honolulu, Hawaii

, 2005

RE: S.B. No. 1730

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Tourism, to which was referred S.B. No. 1730 entitled:

"A BILL FOR AN ACT RELATING TO TRANSIENT ACCOMMODATIONS TAX,"

begs leave to report as follows:

The purpose of this measure is to impose the transient accommodations tax on hotels converting to time shares for one year following the conversion.

Testimony in opposition to this measure was submitted by the Department of Taxation, Cendant Timeshare Resort Group Inc., Fairfield Resorts, Inc., Marriott International, Inc., and the American Resort Development Association – Hawaii Chapter. Comments were submitted by Hawaii Hotel and Lodging Association and the Tax Foundation of Hawaii.

Your Committee finds that the tourism industry will suffer if the trend continues in regard to the growing number of hotels converting to timeshare units or condominiums. This trend is negatively affecting transient accommodations tax (TAT) revenues that are vital to the counties and the State for infrastructure, repair, and maintenance funds.

Your Committee believes that in addition to the loss of TAT revenues, the loss of hotel room inventory could negatively effect the tourism industry as a whole, resulting in a chain of negative economic consequences. Requiring any hotel that converts into timeshare or condominium use to pay a TAT surcharge will help to ensure a stable TAT revenue base and increase economic stability.

Your Committee has amended this measure to include a TAT surcharge in an amount equal to the average of fifty per cent of the previous two years of TAT revenues collected by the hotel, and to specify that the surcharge be levied against the entity owning the hotel prior to the conversion.

As affirmed by the record of votes of the members of your Committee on Tourism that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1730, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1730, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Tourism,

____________________________

DONNA MERCADO KIM, Chair