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Hawaii lawmakers again propose raising car rental tax

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Hawaii News

By Kevin Dayton kdayton@staradvertiser.com

Today
Updated 10:26 p.m.

State lawmakers for the second straight year are proposing to increase the state’s daily car rental tax as a way to fund more highway construction projects that would hopefully reduce traffic congestion.
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State lawmakers for the second straight year are
proposing to increase the state’s daily car rental tax as a way to fund more highway construction projects that would hopefully reduce traffic congestion.

The House Finance Committee on Tuesday approved House Bill 1930, which would increase the daily
surcharge from the current $5 per day to an as-yet unspecified amount. The original draft of the bill would have set the new fee at
$8 per day, but lawmakers have not made a final decision on how much the fee should be increased, if at all.

The Senate Ways and Means Committee, meanwhile, approved Senate Bill 2687 on Tuesday to increase the car rental surcharge to $8 per day on Maui only. That bill calls for the extra money from the surcharge increase to be spent on Maui’s Honoapiilani Highway realignment project.

The state Department of Transportation said in written testimony that the extra money from a higher surcharge “will provide safer infrastructure enhancements for all users including pedestrians, bicyclists, transit
users and motorists,” and would also provide money that can be used to provide the state match for federal highway funding.

With 10 million tourists visiting Hawaii each year, the rental car surcharge has become a significant source of revenue for the state. Lawmakers increased the rental car surcharge to $5 from
$3 per day last year, which transportation officials projected would haul in an extra $30 million a year.

Maui County Mayor Michael Victorino is supporting both the House and Senate bills
to jack up the surcharge again this year, but the measures are being opposed by the Avis Budget Group because the company says the extra cost might discourage people from renting.

“There is more competition in the market,” wrote Robert Muhs, Avis’ vice president for government affairs, corporate compliance and business ethics, in his testimony to lawmakers. “Visitors and
residents have more transportation options, including Uber and Lyft. While we believe visitors prefer to rent a car if their stay is several days or longer, if this passes, some may opt for other options.”

Those concerns were echoed by Enterprise Holdings, which noted that the current surcharge of $5 a day combined with other taxes and fees levied on the industry in Hawaii “are among the highest in the nation.” The Enterprise companies include Enterprise Rent-A-Car,
Alamo Rent-A-Car and
National Car Rental.

The Maui Chamber of Commerce supported the Maui car rental fee increase, arguing that “our transportation infrastructure in Maui County, like the Honoapiilani Highway and Paia Bypass, need significant upgrades, and this additional tax will make these upgrades
possible.”

The bills now go to the full House and Senate for further consideration and votes.

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