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Nearly a century ago, when there were fewer than 23,000 tourists visiting Hawai‘i a year, the Chamber of Commerce put forth a modest proposal to charge a $2 tax on every visitor arriving in port.

The idea, meant to fund improvements to Honolulu harbor, was shot down almost immediately. 

Yes, the Territorial Government needed more revenue, the . But charging tourists for the mere privilege of traveling to Hawai‘i was sure to provoke resentment. Such a fee would be conceivable, they said, “only if it could be concealed.” 

This year Gov. Josh Green is expected to resume his push for a visitor green fee to fund climate change mitigation and environmental conservation. But if past experience serves, it could take years or even decades of fighting for any such measure to pass. 

A review of newspaper coverage from the last century shows that �Ჹ�ɲ���ʻ�� lawmakers and tourism industry lobbyists have been fighting over if — and more importantly, how — to tax tourists long before �Ჹ�ɲ���ʻ�� was a state. 

Over the decades, tourist tax proposals have been called a moral issue by people on both sides of the fight. Plans to impose a flat tax or a daily fee on tourists have been deemed a threat to the state’s image of aloha by opponents. For supporters of a tax, it has been seen as a way to preserve what little aloha people in �Ჹ�ɲ���ʻ�� might have left for tourists.

In the leadup to the state finally passing a Transient Accommodation Tax or TAT in 1986, another pearl of wisdom emerged: It really would be better to keep any such fees as hush-hush as possible. And whatever you do, please don’t call government-imposed fees on visitors a “tourist tax.”  

Are Tourists Paying Their Fair Share?

Although the concept of a tourist tax in Hawai‘i goes back more than a century, the idea started to gain steam in the mid-1950s, amid Territorial Government budget woes.

Lawmakers introduced new proposals for a tourist tax nearly every year between 1955 and 1986.

Some proposals called for a head tax — either a flat fee on each non-resident arriving in the state, or a daily rate. Others suggested a tax on hotel rooms and other accommodations.

In 1962, the governor voiced support for a tourist tax, but quickly bowed to pressure from the hotel lobby and agreed not to consider such a measure until after the issue had been studied more.

Two years later, public debate over the issue became more frequent — and heated — after newspapers revealed that lawmakers were weighing a “confidential report” laying out several proposals for tourist tax options.

The report primarily called for a 25-cent daily fee on tourists, because it would be fairer and more transparent. An excise tax on hotel bills would be disguisable but was a less desirable option, the report author opined.

“We have no business taxing our tourists unless we want to forget about our aloha spirit.”

David A. Benz, former head of the �Ჹ�ɲ���ʻ�� Visitors Bureau, 1965

But the idea of taxing tourists was “repugnant,” the head of the House Tourism Committee complained, amid significant pushback from hotel lobbyists and what was then called the Hawai‘i Visitors Bureau. It would put a damper on tourism and tarnish the image of aloha that the industry was counting on to entice visitors.

“We’re not selling scenery, we’re not selling hula dances, we’re selling aloha,” David A. Benz, a businessman and former head of the visitor’s bureau told lawmakers in a 1965 Legislative hearing covered by the Honolulu Star-Bulletin. “We have no business taxing our tourists unless we want to forget about our aloha spirit.”

The debate was not relegated to the Capitol. Honolulu Mayor Neal Blaisdell wanted a tourist tax to help the city run its public facilities and took issue with a lack of support from state politicians. Every other place he’d traveled, the mayor told the Star-Bulletin in 1967, he paid a room tax or an airport tax.

“But the mere request to study the possibility of a tourist tax, and I get my brains beat out.”

Honolulu Mayor Neal Blaisdell, 1967

“But the mere request to study the possibility of a tourist tax, and I get my brains beat out,” . “Frankly, I’m annoyed that nobody has stood up with me on this …”  

Two years later, his successor Frank Fasi went to the public with an impassioned plea: Making visitors pay their fair share was a moral issue for the state. 

Hawai‘i was on pace to see four or five million visitors a year by the mid-70s, a data point that the mayor found simply “appalling.”

“Just as the most gracious hostess would not invite more guests to her home than she can comfortably entertain at one time,” Fasi said at the time, “so too, Honolulu should not be a rude hostess and invite more people here than can be accommodated with ease and enjoyment.”

Fasi made enacting a tourist tax a personal mission for decades. As member of the city council, he proposed that city and state lawmakers team up to pass a tourist tax to purchase and preserve land on Diamond Head.

The state had a moral obligation to pass a tourist tax to help protect the islands’ natural treasures, improve recreational facilities for residents and visitors alike, and help regulate an industry that people were beginning to sense was growing at an out-of-control pace, Fasi and his supporters said. 

Fasi had a slew of ideas: The state could impose a per-person tax upon arrival, levy a hotel room tax, or give counties the right to impose their own tourist taxes. Without the power to tax, he suggested the city might charge license fees for tourist activities instead.

Fasiʻs ideas had some support among lawmakers, but they were put on ice pending the results of yet another study.

But the issue had become such a part of public discourse that in 1970, David Watumull — a businessman and “Republican dark horse” candidate for the governor’s office — took out a series of dramatic ads positing the tourist tax proposals as a live-or-die moment for the industry and its workers. 

Year after year, new proposals were introduced and then died in committee.

In 1976, a battle between state lawmakers in the House and Senate over a tourist tax reached such a feverish pitch that it caused a two-day extension of the session — and a political maneuver to kill a vote that the . The real death blow to the proposal, newspapers later deemed, had been the fact that it was an election year and too many politicians were hesitant to take up such a controversial measure.

Don’t Call It A Tourist Tax

“Here we go again!” a newspaper reader opined in the Star-Bulletin in 1977. “As soon as our State Legislature convenes, the allied tourist businesses begin their expensive TV advertising to convince us that the tourist industry is so valuable that it is untouchable.”

It was the third year in a row, the letter writer said, that advertising had been used to “intimidate our legislators and scare them from putting through a much-needed tourist tax.”

Opponents of a tourist tax were able to stave off a tax for decades by raising concerns about an economic recession and the impact that a tourist tax might have on what was fast becoming the state’s biggest industry. Hotel workers supported the advertising campaigns by writing letters to lawmakers opposing any tax.

Then in the 1980s, momentum gained for taxes that would be more hidden from visitors. In 1981, lawmakers introduced at least five bills calling for a hotel or tourist tax. Former Gov. Neil Abercrombie, who was then a state senator, wanted the tax to be a “visitor destination improvement fee” that could be “invisible to the tourist because it would not be separately stated on bills,” .

Four years later, the House Tourism Committee supported a proposal to raise the state’s General Excise Tax but simultaneously provide tax credits to residents to offset the increase, a strategy that Senate President Richard Wong dismissed derisively as a “shell game” to hide the tax.

It would be more honest, he argued, to simply add a tax to hotel stays.

That’s what lawmakers finally did in 1986, passing a 5% tax on hotel rooms and vacation rentals after more than three decades of debate.

Though it was deemed a more honest tax by Wong, tourism industry lobbyists quickly got to work rebranding the charge that visitors would see on their bill. By the time the law went into effect, most newspapers were using quotation marks around the term “tourist tax” in stories about the measure.

The TAT or transient accommodation tax wasn’t really a tourist tax, the head of the Hawaii Hotel Association argued, because �Ჹ�ɲ���ʻ�� residents using temporary accommodations had to pay just the same as visitors.

Whatever the name, the TAT was quickly hailed as a huge moneymaker for the state, and most subsequent arguments morphed into how much to raise the tax and how to divvy up the proceeds.

Over the last four decades, the transient tax has more than doubled and �Ჹ�ɲ���ʻ�� now has the highest accommodation tax of any state in the nation.

The steep charge does not appear to have dampened people’s enthusiasm for visiting the islands.

In 1986, �Ჹ�ɲ���ʻ�� hosted nearly 5.7 million visitors. Last year, roughly 9.6 million visited the state.