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The Honolulu Advertiser
Posted on: Monday, May 4, 2009

COMMENTARY
Tourist taxes cost too much for too little

By Gloria Garvey

Gov. Linda Lingle should veto the new taxes on tourists — the increases in the transient accommodations tax and the car rental taxes buried in the highway bill.

One of my first jobs in Hawai'i was at the Sheraton Waikiki. Our administrative offices were on the fourth floor and every day I rode the elevators, envious of visitors smelling like coconut oil. They seemed oblivious to the hideous Dorothy Draper interior design, and thought Waikiki unbelievably cool.

That was in 1973. A lot has changed in the last 35 years, but one thing hasn't: our absolute dependence on tourism.

The first time the Legislature levied the "TAT," we didn't live our lives online. This time, we live our lives online and loyal visitors who follow Hawai'i know what we do when we need more money. We tax them and hope they won't notice.

Recently it was reported that the visitor industry is more important in terms of our economy than previously thought. To me, that means that we should be very careful with how and when we levy taxes on what the visitors spend. In the first half of 2008, it was reported that visitor spending was down 3.4 percent to $5.9 billion dollars. With very rudimentary calculations, that means visitors paid more than $235 million in taxes, not counting the TAT, in the first six months of 2008.

Some legislators openly mock the industry's concern that these new taxes will keep visitors from coming as a "cry wolf" mantra of the visitor industry. They are wrong.

The proposed increase is, in fact, more than 40 percent and "should raise $30 million the first year." Thirty million dollars seems like small potatoes for a big risk.

As a partner in two small businesses, I am well aware of the importance of the visitor industry. One is a strategic branding consultancy that — on the face of it — would not seem to benefit from visitor spending. Having worked with Hawaiian Host, Aston Hotels, the Hawaii Seal of Quality, Maui Brand Sugar and Kauai Coffee, to name just a few, I know that our business depends on the visitor industry in very direct as well as indirect ways.

My other business is a retail store in Kailua. We are well-supported by the windward side, but as Kailua becomes more well-known, without the visitors who shop at our store we would have a far different experience as a small business.

Given that Hawai'i is in the business of caring for strangers, spreading the aloha spirit and being some of the most accommodating people in world, there is so much irony in calling it a tourism accommodation tax. Keep taking more of their money and they will go somewhere else.

Reach Gloria Garvey at (Unknown address).

Gloria Garvey has been partners with Brook Gramann in The Brand Strategy Group for 20 years. They also own Lanikai Bath and Body in Kailua. Reach her at gloria@thebrandstrategygroup.com.