The Honolulu Star-Advertiser reported today on the State's efforts to crack down on illegal short-term vacation rental units through continued enforcement efforts and tax collection on units that have been skirting the system. This year alone, tax investigators have collected $4.1M in back taxes and estimate that they will end up taking in more than $12M by the end of the year. In one alarming instance, the Star-Advertiser reported that a single unit was required to pay the State $400,000 in back taxes.
It has always been HLTA's position that legal short-term rental units that pay their fair share of the necessary taxes are more than welcome in appropriately zoned areas where they are deemed legal. We do, however, take issue with those units and operators that have proliferated in residential areas and don't pay suitable property tax rates, the GET or TAT, and we have continued to push our State and county governments to increase their overall efforts and seek legal recourse on those that are operating illegally.
Prior to the pandemic, the number of visitors to our state who opted to stay in short-term rental units rather than traditional, brick and mortar lodging locations was growing at a steady rate, and this trend has continued throughout the pandemic. It is imperative that these units be on the same level playing field, and I was pleased to see Gov. Ige echo our long-held belief that these units should be paying their fair share of taxes.
I hope that this served as a positive step toward our State and county governments collaborating to address this nettlesome issue. State Department of Taxation Director Isaac Choy indicated as much in his comments to the Star-Advertiser, and it is a subject that we will continue to prioritize through HLTA's advocacy efforts.
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