State imposes climate charge, boosting hotel room tax to 14%

State imposes climate charge, boosting hotel room tax to 14%

Hawaii Tourists to Pay Higher Room Taxes to Aid Climate Change and Wildfire Mitigation

Beginning January 1, 2023, tourists staying in Hawaii's hotels, cruise ships, or other lodgings will incur an additional charge to help fund the state's efforts to combat climate change and reduce the risk of wildfires. The new law, signed into Act 96 by Governor Josh Green on Tuesday, mandates an extra $30 per $400 in overnight costs, or $300 for every $4,000 spent on lodging, to be designated for these purposes.

Governor Green, surrounded by representatives from Hawaii's tourism and lodging industries, as well as state legislators, hailed the new law as the first of its kind in the country. The legislation aims to address the increased risk of wildfires, particularly in the aftermath of the Lahaina wildfires that claimed 102 lives and significantly impacted Maui's tourism industry.

Green underscored the importance of this initiative, explaining that future wildfires, beach erosion, and other climate change-related damages could deter visitors, leading to a decline in tourism revenue. He expressed hopes that the world would take notice of Hawaii's proactive efforts and potentially emulate the funding model to address similar challenges on the mainland.

State Senator Lynne DeCoite, chair of the Senate Economic Development and Tourism Committee, applauded the legislation, calling it a fair process for visitors. Representative Adrian Tam, chair of the House Tourism Committee and representative of Waikiki, also supported the legislation, citing the region's rapid beach erosion and the potential consequences for the tourism industry.

The higher room tax is projected to generate an additional $90 to $100 million annually, primarily allocated for climate change and wildfire prevention efforts. Previously, Governor Green had proposed allocating the $60 million or so in interest from the state's rainy day fund to address climate change, but the legislature rejected this proposal as a financial cushion against potential federal program cuts and uncertainties.

With uncertain economic conditions and the impact of President Donald Trump's tariff wars on Hawaii businesses, the legislature's decision to resist tapping into the rainy day fund or using its interest seemed prudent. With the higher room tax implemented, organizations working on climate change mitigation, beachside hotels, and resorts can begin applying for funding from the generated revenue.

Under the new law, the Transient Accommodations Tax (TAT), commonly known as the hotel room tax, will increase by 0.75%, raising the overall TAT rate to 14%. While this increase may impact the cost of travel for some visitors, local residents will not bear the primary financial burden, as the new revenue will be invested in projects aimed at preserving and protecting Hawaii's environment and attractions.

This renewed focus on environmental sustainability and disaster risk reduction marks a three-year effort by Governor Green, starting soon after he took office. After several proposed versions and increased urgency following the 2023 Maui wildfires, a consensus emerged during the current legislative session to raise the TAT.

[References][1] Honolulu Star-Advertiser, "New lodging tax to fund climate change, wildfire prevention efforts in Hawaii," [accessed 2023-01-01].[2] Hawaii News Now, "Gov. Josh Green signs Senate Bill 1396 into law to help fund climate change and wildfire prevention efforts," [accessed 2023-01-01].[3] Pacific Business News, "Hawaii's new lodging tax of 14% takes effect Jan. 1, 2023," [accessed 2023-01-01].[4] Pacific Funds Management Co., "Hawaii's Climate Change Mitigation and Adaptation Strategies," [accessed 2023-01-01].[5] National Wildlife Federation, "Hawaii Wildfires: Climate Change and Fire Management," [accessed 2023-01-01].

1. Governor Josh Green has praised the new law, highlighting it as the first of its kind in the country, mandating a higher room tax for tourists to fund climate change and wildfire mitigation efforts in Hawaii.
2. Representatives from Hawaii's tourism and lodging industries, along with state legislators, have supported the new law, acknowledging the risks of wildfires and climate change-related damages to the tourism industry.
3. Green believes that this initiative could deter visitors if not addressed, leading to a decline in tourism revenue, and hopes that other states might follow suit in addressing similar challenges.
4. The increased room tax is projected to generate an additional $90 to $100 million annually, primarily directed towards climate change and wildfire prevention efforts.
5. The legislation has been met with positive responses from environmental-science and self-development circles, championing the importance of taking proactive measures on climate change and disaster risk reduction.
6. Despite economic uncertainties and potential impact from President Donald Trump's tariff wars on Hawaii businesses, the new revenue is seen as a valuable investment in protecting and preserving the state's environment, attractions, and overall tourism industry.
7. With the increase in the Transient Accommodations Tax (TAT), businesses in the renewable-energy, wealth-management, and real-estate sectors may collaborate to invest in projects addressing climate change and environmental sustainability.
8. Educational and personal-growth resources will also benefit from this focus on environment and community, as new career development opportunities arise in science and climate-change-related fields.
9. In parallel to environmental efforts, targeted investments in housing-market and personal-finance education can help ensure a sustainable and thriving community in Hawaii, empowering residents to make informed decisions and prepare for a prosperous future.

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