Governor Plans To Veto Short-Term Rental Tax Bill

Jun 24, 2019

Governor David Ige announced that he will tentatively veto 20 bills passed by the state legislature in 2019.
Credit Ryan Finnerty

Hawaii Governor David Ige on Monday announced he plans to veto a bill that would require short-term rental booking platforms to collect state taxes. The measure, S.B. 1292, was passed by the state Senate last month by a single vote.

  On the last day to declare his intention to veto measures adopted by the 2019 Legislature, the governor also announced he will reject a measure to restrict the use civil asset forfeiture, a bill that would have allowed the transport of medical cannabis in between islands, and a proposal to eliminate tax deductions for REITs, real estate investment trusts.

The short-term rental measure, however, was possibly the most closely watched of the bills because of the controversy kicked up by thousands of illegal vacation units that have sprouted in residential areas statewide.

The recent passage of two highly-contentious bills restricting those rentals by the Honolulu City Council gave rise to fears that S.B. 1292 would have undermined efforts by local officials to crack down on unpermitted vacation rentals. 

Ige said the state did not believe that tax measure would have subverted county regulations barring short-term rentals, but decided that further review was needed before approving such a proposal. 

The Democratic governor's veto decisions paint a picture of an administration attempting to walk the line between encouraging business investment in a slowing economy and addressing social concerns of a reform-minded Legislature. 

See the full list of bills the governor intends to veto here.