Posted on: Monday, May 5, 2003

EDITORIAL
Wean hotel industry from state tax credits

Whatever happened to our politicians' so-called drive to diversify Hawai'i's economy? The 2003 legislative session has wrapped up with the most generous tax breaks going, once again, to the hotel resort industry.

Gov. Linda Lingle is poised to sign two major tax-credit bills. One would extend the hotel construction and renovation credit for three years at 8 percent of the construction or renovation costs and for the following four years at 4 percent. The other would give the Ko Olina Resort and Marina $75 million over a decade for construction of an aquarium.

We urge the governor not to sign these measures into law for the following reasons:

While we appreciate that these breaks are intended to stimulate the economy, we'd prefer to see them used to foster fledgling industries. It's imprudent for the state to keep subsidizing tourism projects that are part of what is, after all, a well-established industry.

The Ko Olina development has been touted as a project intended to bring construction and tourism jobs to the sluggish Leeward Coast. And who can deny that pressing need?

But we'll bet this particular prime real estate would have been developed regardless of tax credits. A state-supported aquarium doesn't guarantee its success.

Rep. Sol Kaho'ohalahala, whose district includes Lana'i, says he has asked Ko Olina developers for guarantees that jobs would go strictly to area residents and be "good, high-paying jobs." The response, he says, has been vague.

There was a time when the visitor industry needed tax breaks to survive sudden downswings. But it's time to shift that assistance to fresh enterprises, and let the previous beneficiaries stand on their own two feet.