Millions of tourists visiting paradise island set to be whacked with new tax

A stunning island state that is visited by millions of tourists each year is all set to introduce a tourist tax to cope with a warming planet. Hawaii, an island state of the United States, may soon be imposing a tax on travellers staying in hotels, vacation rentals and other short-term accommodations, it has been reported.

The first-of-its-kind move would generate £75 million ($100 million) in new revenue annually, authorities have said. A bill scheduled for House and Senate votes this week — initially scheduled for Wednesday but moved to Friday — would add an additional 0.75% to the daily room rate tax starting January 1 2026, reports Euro News.

According to the state leaders, the fund will be utilised for for projects like replenishing sand on eroding beaches, helping homeowners install hurricane clips on their roofs and removing invasive grasses like those that fuelled the deadly wildfire that destroyed Lahaina two years ago.

The Hawaiian town of Lahaina experienced the deadliest US wildfire in more than a century in August 2023, which killed 102 people, displaced thousands and turned the town into ashes.

Gov. Josh Green said in an interview: “We had a $13 billion (£9.7 billion) tragedy in Maui and we lost 102 people. These kind of dollars will help us prevent that next disaster.”

Mr Green said Hawaii was the first state in the nation to do something along these lines. Andrey Yushkov, a senior policy analyst at the Tax Foundation, a Washington, D.C.-based nonprofit organisation, said he was unaware of any other state that has set aside lodging tax revenue for the purposes of environmental protection or climate change.

According to the estimates, the state's existing 10.25% tax on daily room rates would climb to 11%.

In addition, Hawaii's counties each add their own 3% surcharge, and the state and counties impose a combined 4.712% general excise tax on goods and services, including hotel rooms.

It will come to a tax rate of around 19%.

Mr Green is sure that the tourists will have no problem in paying the tax as this will enable the authorities to “keep the beaches perfect” and preserve favourite spots like Maui's road to Hana and the coastline along Oahu's North Shore.

Jerry Gibson, president of the Hawaii Hotel Alliance, which represents the state's hotel operators, said the industry was pleased lawmakers didn't adopt a higher increase that was initially proposed.

Mr Gibson said: “I don’t think that there’s anybody in the tourism industry that says, ‘Well, let’s go out and tax more.’ No one wants to see that. But our state, at the same time, needs money.”