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Senate approves 1% increase in transient accommodations tax and extends TAT to cruise-ship activity
Summary
The Senate approved SB 13 96 CD2, which raises the statewide transient accommodations tax (TAT) by one percentage point and extends TAT coverage to certain cruise-ship activity. The floor debate exposed concerns about impacts on neighbor-island economies and resident affordability; the bill passed 23'.
HONOLULU — The Hawaii State Senate voted to approve Senate Bill 13 96, conference draft 2, a measure that raises the transient accommodations tax (TAT) by 1 percentage point on lodging and applies a TAT to cruise-ship activity, after floor discussion that included island-economy and equity concerns.
Senators debating the measure said it would raise revenue for state priorities including climate change mitigation, restoration and disaster resilience. Supporters argued the one-point increase represents a modest change that will supply funding for projects and that hotel and lodging industries, which currently enjoy high average daily rates, could adjust pricing.
Senator Inouye and other members from neighbor islands expressed reservations about how the tax would affect communities dependent on cruise-ship visits, noting that some US-flag inter-island cruise activity could be curtailed and that local businesses in Hilo, Kona, Maui and Kauai could suffer. "This cruise ship tax will negatively impact communities like Hilo, Kona, Maui and Kauai," one senator warned during floor remarks.
Senator Wakai, among other supporters, said similar past increases have not harmed tourism growth; he noted a previous 1% increase used to fund rail that did not halt visitor growth in the years that followed. Supporters asked the hospitality industry to consider lowering room rates to offset the tax increase.
The Senate recorded 23 ayes and 2 noes on final reading. Senators Awa and DeCorte cast the two no votes. Several senators entered statements of "support with reservations." With the vote recorded on the floor, SB 13 96 CD2 passed final reading.
The transcript shows the chamber debated both macroeconomic effects on tourism and the bill's targeted policy goal of funding climate- and resilience-related priorities. The floor record does not include the bill's full text or detailed spending allocations; senators repeatedly described the funding as intended for mitigation, restoration and projects prioritized by the administration and the legislature.
What happens next: SB 13 96 CD2 passed final reading in the Senate. The transcript does not record any subsequent enrollment, concurrence from the House, or signature status from the governor.
