Monday, March 27, 2006


Sen. Donna Kim Does the Unthinkable To Timeshare Owners

History was made at the state Senate Tourism committee yesterday, when the committee chair Donna Mercado Kim held a hearing on HB 1026, which sought to raise the current TAT on timeshare owners by as much as 4 times the present rate.

More than 1,400 emails in opposition from mainland owners of Hawaii timeshares, 49 testimonies of local owners of timeshares in opposition and several individual timeshare owners who showed up, all testified against the bill and the timeshare increase.

The only support for the measure came from testimony of two unions -- the ILWU and the HGEA, whose representatives did not show up. They were instrumental in the bill’s movement because of their continuing opposition to major hotel chains in Hawaii who continue to market and expand timeshare units along with their hotel units.

What made the hearing unusual was that Lowell Kalapa of the Tax Foundation of Hawaii and committee member Sen. Sam Slom, R-Hawaii Kai, reviewed the origin in 1998 of the TAT tax being applied to timeshare owners in the first place. Since the TAT is the tax applied to rentals, the argument then was that it was unfair, illogical and unconstitutional to apply to timeshare owners.

These property owners already pay real property taxes, General Excise Tax and maintenance fees, and since 1998, they have had to pay the TAT as well as if they were renting the property that they own. By increasing this tax, the situation would be made worse, affecting predominantly local owners of Hawaii properties who were in fact investing for themselves and their families in Hawaii.

After the lengthy discussion, Kim said had she been in the Senate in 1998, she would have joined Slom in opposition to this as an unfair tax. She then discussed the committee options: to hold the bill, to amend the bill, to pass the bill with a blank amount as it was presented, or to reduce the amount of the current tax. But instead, she led the effort to do the unthinkable -- repeal the tax and the bad law altogether.

The TAT would not apply to timeshare ownership -- and the committee voted 4 to 0 to do just that, including Senators Kim, Slom, Clarence Nishihara and Wil Espero.

The amended bill next goes to the Senate Ways and Means Committee, and if approved, goes to the Senate floor. The actual tax repeal faces an uncertain future if it returns to the state House, but it was a noteworthy event and an achievement for taxpayers rarely seen in the state Legislature.

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