Committees advance amended visitor tax bill; deletes points surcharge, expands TAT to cruise ship docking fees and funds natural-resource projects

A joint hearing of the House Committee on Tourism and the Committee on Water and Land on March 20 advanced an amended version of Senate Bill 1396 (SD3 HD1) to raise and redirect transient accommodations tax revenues toward natural-resource protection, climate and hazard mitigation, and sustainable tourism.

The committees amended the bill to remove language that would have levied a $20-per-night charge tied to bookings redeemed with loyalty points or miles, and to add cruise ships and cruise-ship cabins to the definition of transient accommodations so the TAT applies to docking fees. Committees also added environmental stewardship, climate and hazard mitigation, and sustainable tourism to the list of allowed uses for the fund created by the measure.

Why it matters: supporters and agencies said Hawaii faces a large funding shortfall for natural-resource stewardship and offered polling and program lists showing visitor willingness to pay and projects ready to proceed. Opponents cautioned that raising visitor taxes could harm local businesses and that parts of the bill posed administrative and enforcement challenges.

Department and agency positions Dawn Chang of the Department of Land and Natural Resources (DLNR) told the committees that DLNR “stands in strong support of this bill,” and said the department plans to use funds for numerous projects and to collaborate with other agencies on sustainable tourism and stewardship. DLNR later told members it has a list of projects totaling close to $400,000,000 that it could begin work on if funding were available.

Will Cain of the Governor’s Office said the office stood on its written testimony and would be available to answer questions. DOTAX Deputy Director Kristen Sakamoto said the tax department would supply revenue estimates and described enforcement complications if the tax were tied to points and nonmonetary transactions.

Revenue estimates and fiscal context Department of Taxation figures cited at the hearing show that TAT collections for fiscal 2024 totaled $828,300,000. DOTAX estimated a 1-percentage-point TAT increase would raise roughly $43,500,000 (half year, FY26) and about $90,000,000 for FY27; the department also estimated a $20-per-night room fee (the version tied to points) would generate about $80,800,000 but warned the estimate relied on uncertain assumptions because data on points-based bookings are limited.

Advocates and opponents Nature Conservancy Hawaii and other environmental groups urged passage, citing polling the groups said shows broad visitor and resident support for fees to protect land, water and cultural resources. Elizabeth Beneshek (Nature Conservancy Hawaii) highlighted poll results she said showed 76% of visitors willing to pay an annual fee for protection of natural resources and higher figures among repeat visitors; several other testifiers referenced visitor polling and urged a dedicated fund and community-driven grants.

Industry groups and chambers raised concerns. Tom Yamachika of the Tax Foundation of Hawaii testified that singling out tourists for funding is questionable and that the bill combined unrelated concepts. The Maui Chamber of Commerce opposed the proposal, saying Hawaii already has many visitor-facing taxes and that another increase could depress visitor spending and harm businesses still recovering from recent disasters. Expedia’s representative said the company supported investments in natural resources and the proposed percentage increase but warned that a tax provision based on form of payment (points/miles) would be novel and operationally difficult.

Administrative and enforcement issues DOTAX told members it lacks complete data on how many rooms are booked with points and that points-based transactions can take varied forms (hotel-issued points, third-party programs, and different valuation methods). Sakamoto said implementing collection on nonmonetary redemptions could require audits, assessments of hotel records, and possibly administrative rules to value points for tax purposes. Committee leaders removed the points-based $20 charge from the amended version and instead extended TAT liability to cruise-ship docking fees; committee staff said the change was intended to capture revenue sources not already subject to TAT.

Other testimony and context Speakers emphasized wildfire and climate risks and the need for durable revenue. Resource Legacy Fund said Hawaii faces an urgent $560,000,000 annual shortfall for necessary stewardship work and urged passage. Medical and emergency preparedness testimony—separate public commenters—asked that funds also be allowed for community resilience projects such as shelters; one testifier called for large, multi-year shelter investments.

Committee action The joint committees voted to pass SB1396 (SD3 HD1) with the amendments described above (removal of the points-based $20 charge, inclusion of cruise ships in the TAT definition, and explicit inclusion of environmental stewardship, climate/hazard mitigation and sustainable tourism among allowable uses). The committees recorded the measure as approved and forwarded it for further processing.

What’s next The amended measure proceeds from the committees. Proponents point to polling and agency project lists to argue that a dedicated, ongoing fund would let Hawaii begin or accelerate hundreds of stewardship and mitigation projects; opponents pressed concerns about tourist price sensitivity and operational complexity of tax collection tied to nonmonetary transactions.

Ending note At the hearing, committee members and agency officials repeatedly said more detailed revenue and implementation analysis will be needed if the bill advances further, especially for any provision tied to loyalty points or other noncash exchanges.