Two Sides to Hawaii Timeshare Tax Increase Issue

The Westin Kaanapali Ocean Resort Villas timeshare resales and rentals.

How timeshare is taxed by local agencies has been a hot topic over the past year.

And when the topic came up at the April 13 County Council’s Budget and Finance Committee meeting in Maui, the subject was just as volatile and problematic as ever. Drawing a capacity crowd of over 200, the issue on the table was whether to raise the property tax millage rates from $14 to $19.60 per $1,000 in timeshare property value.

All the arguments against the 40 percent tax increase make great sense. Hawaii timeshare has been a huge boost to local economies, adding to the tax base, employment opportunities and secondary revenue streams as timeshare owners spend money on groceries, entertainment, restaurants, and other goods and services each time they vacation.

According to Budget Director Sandy Baz, however, the tax rate increase wasn’t proposed to garner more money, but merely to sustain tax roll revenues. Baz explains, “Proposed tax rates for 2012 were adjusted to compensate for the continued decline in property values for each classification except for the homeowner class, so that revenues remain fairly neutral. The administration is supportive of adjusting the final tax rate for all classifications, including the time-share classification, after the certification of real property values on April 19th.”

In other words, because property values have so declined in the current economic climate, a tax rate increase would merely keep tax revenues at a stable or “neutral growth” level, enabling local agencies to continue to budget a consistently as they provide police, fire, and other services that benefit both local residents and timeshare owners.

Will Hawaii Timeshare Owners Carry an Unfair Load?

The bite seems to really come in determining how to fairly distribute this property tax burden. Daniel Dinnell speaking on behalf of ARDA Hawaii, points out, “As ARDA Hawaii has previously testified, following a 69 percent increase to the real property tax in 2005, the timeshare industry is again being singled out with the largest single increase of $5.60.”

Among others speaking out against the proposed tax increase were Rob Welch of Marriott’s Maui Ocean Resort Club; Gregg Lundberg, The Westin Kaanapali Ocean Resort Villas; University of Hawaii School of Travel Industry Management graduate, Michelle Rose Abad.