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HI Making Headway on Vacation Rental Tax System

Hawaii’s House and Senate both passed bills last week that would require short-term rental platforms like Airbnb to collect and pay taxes on behalf of their hosts.


Collection of the state’s transient accommodations and general excise taxes have been complicated by the fact that many vacation rentals in the state are operated without permits. It’s been estimated that the state’s most populous county, Honolulu, has about 10 times as many illegal rental units as legal ones, 8,000 versus 800.


Hotel operators have been calling for more thorough taxation of vacation rentals for years, according to Mufi Hannemann, president of the Hawaii Lodging and Tourism Association.


“We want a level playing field,” he said. “If we’re paying taxes, if we’re paying fees, we want them to do the same.”


Vacation rental companies oppose the bills, contending they would require them to turn over personal information about their rental hosts.


The state’s Legislature actually passed a similar measure several years ago, but Gov. David Ige (D) vetoed it over concerns it would foster illegal rentals. Lawmakers say they’ve been working with the governor’s chief of staff and other state officials to avoid repeating that scenario. (ASSOCIATED PRESS)