I’ve had many a discussion with our kids about taxes and why one has to pay them. Yes, we all like to complain about taxes, but in truth, if noone paid tax, we’d have to find another way to fund the basics we all want to have taken care of for us.
Yes, even in paradise (or should I say especially in paradise) we pay our share of taxes. State lawmakers have been struggling to find a way to pay for Oahu’s light rail transit system especially since costs spiraled out of control. Yes, it turns out it has been a bit of a boondoggle. Opinions range from ‘shut the whole thing down’ to ‘raise taxes’ and various versions in between. After failing to deal with it in the spring legislative session, lawmakers came together in August for a special session specifically to deal with the light rail transit system.
Did I mention, this rail system is only on Oahu? Sigh. Oahu is smaller than Maui but with a population of over a million, and it is known for its traffic congestion. In fact, one of their highways is in parts 6 lanes across. I don’t begrudge them a transit solution. I guess I just wish our guests’ tax dollars went towards funding one of the many special projects we need done here on Maui instead.
The end result of the special session is an increase in the State’s transient accommodation tax (TAT) from 9.25% to 10.25% effective January 1, 2018. This is Hawaii’s version of a hotel tax and applies also to all vacation rentals. Just FYI, time shares pay a higher percentage still.
In addition to the TAT, you also pay general excise tax (GET) on everything purchased in Hawaii (all goods, services, and yes, also your vacation rental). The GET is 4.167%. So the new total tax goes from 13.417% to 14.417%.
How much will this really affect you? If your vacation rental is $1000/night, the added tax works out to $10.
In the overall scheme of things, it could be worse (lawmakers had been discussing increasing the TAT by 5 points instead of the 1 we got). I suppose we should be thankful.
So remember, should you make it to Oahu – go ride their light rail transit system! Once it’s finally completed, that is. Current estimated completion date is sometime in 2025. Maybe.
Can you avoid paying the tax?
All legal vacation rentals in Hawaii by law have to submit both taxes (the TAT and GET) to the government. By law they need to post their tax IDs on all their advertising (look for it). If you come across a landlord or property manager not charging the tax, be very careful. Chances are great this is a scam – an illegal rental (which could be shut down at any time) or a con-man trying to get your money. Wouldn’t that be an awful way to start your vacation – arriving on Maui with no place to stay!