Hawaii wants to leave Canadians in the cold

Much has been written in these pages in The Vancouver Sun about Catalyst Paper and its battle to see the District of North Cowichan bring balance to its industrial tax rates. Now, with the company in creditor protection, little time to set the fundamentals right, and a recognition that jobs and benefits could be lost forever if they aren’t, there has been much attention paid to the role of the North Cowichan council’s tax intransigence in killing the goose that laid the golden egg.

North Cowichan council does not stand alone in demonstrating “me-first� policies that threaten all around it. The Hawaii state legislature has taken dead aim at NAFTA and the provisions it requires of the state, and the protections it affords Canadians who make cross-border investments in vacation rental properties.

Through digital communications and the Internet, owners of vacation rentals have been able to rent them out to Canadians and others seeking to visit the Aloha State, using websites they’ve created, and others they’ve joined, like Vacation Rentals By Owner. And no wonder: As the state reported last year, Canadians travel in party sizes of two or more, are more commonly repeat visitors, independent travellers, and stay in hotels and condominiums. Canadian vacationers get the accommodation they want, and the state reaps great benefit from its tourism export. The Hawaii Tourism Authority reports that, in December 2011 alone, visitor arrivals from Canada were the force in Hawaii tourism, spending close to $1 billion.

But like the video store, the record store, and the landline home phone, Hawaii property rental companies have been hit hard by the digital age. Travellers are, for a host of reasons, deciding they’d prefer to rent directly from an owner, and the Internet makes this possible. In the face of this consumer choice, Hawaii property rental agencies and the realtors they employ had two choices: compete in the digital age, or find a fix that turned back the clock. And in pressing the turn-back-the-clock easy button, they found Hawaii state legislators happy to oblige.

Four bills are advancing through the Hawaii legislature that target off-island, i.e., Canadian, owners

You can read the rest of this article at: http://www.vancouversun.com/Hawaii+wants+leave+Canadians+cold/6395019/story.html

5 Responses to Hawaii wants to leave Canadians in the cold

  1. Elen Stoops Reply

    April 16, 2012 at 12:19 pm

    At last, glad to see this information appearing in a more prominent journal in mainland US.

    For non-resident (ie NON-VOTING) owner/investors who have managed successful rental operations in Hawaii, it is shocking how much disdain is being shown by Hawaii State Legislators for laws we take for granted.

    Their state attorney general has at least been coaching them to revise these discriminatory measures by suggesting they need to add new language and provisions that give appearances of not being discriminatory. Is this legal? Coaching AFTER a bill has been written to make it’s original unconstitutional intent SEEM legal?

    Basically the AG rules that the law as written places an challengeable burden on nonresidents due to higher US Law (Constitutional and Interstate Commerce) and even the AG comments that there is no empirical/statistical evidence shown or possessed by the State of Hawaii that nonresidents tax payments are a problem (the ‘foundation’ the HI legislature is using to justify special requirements for nonresidents).

    The evidence of the attempt to subvert violation of NAFTA and US Constitutional Law can be seen in the documented progression of the Bills’ (HB1707, HB1706, SB2089, SB2078 amendments.

    Per a note in the State’s Attorney General testimony of Feb. 29.

    “…. In addition, because the property manager requirement is imposed only on “nonresident owners” the bill may invite a legal challenge under the Commerce Clause, the Equal Protection

    Clause, and/or the Privileges and Immunities Clause of the United States Constitution. Each of
    these clauses generally prohibit discrimination against nonresidents or discrimination in favor of

    “in state” residents. It is not clear what the outcome of such a challenge would be, because the
    bill does not impose different rates of tax on nonresident owners, or deprive them of any tax
    credit or exemption, but it does impose burdens that are not imposed on resident owners.

    If adopted into law, this bill would be more likely to survive a legal challenge if the
    Legislature could include in a “purpose” section of the bill a rational basis for why imposing a
    differing burden on nonresident owners than resident owners serves an important public purpose.

    If there are empirical evidence or studies that demonstrate that nonresident owners of transient
    accommodation are not paying transient accommodation and general excise taxes, or are noncompliant

    with county zoning requirements, the bill would be more likely to survive a legal


    Likewise, if like House Bill No. 1707, H.D. 2, this bill were amended to define “nonresident owner” as an owner of a rental property in the State who resides on a different island from the property or out-of-state and who rents or leases the property to a tenant, the bill would stand a better chance of surviving a legal challenge because the property manager requirement would apply to state and non-state residents alike.

    We respectfully recommend that the Committee make the suggested amendments.”

    This is an attack on the non-voting investor/small business owner and violates US Constitutional Law. What these bills all amount to is cheap votes for Senators and Represenatives of Hawaii State seeking relection by the locals who are glad to see these laws won’t [yet] apply to them as well as providing economic Favors to their major campaign contributors (the licensed Real Estate Property Manager Proponents and the Hotel Industry Lobbyists).

  2. JWE Reply

    April 16, 2012 at 1:23 pm

    Hawai’i legislators and property managers also want to leave mainland US property owners out in the cold.

    In an effort to subvert the intent of the equal protection clause of the US constitution, the bills have been changed so they no longer put additional burdens on non-residents, but rather they put the additonal burdens on those who do not reside on the island where the property is. (if you do not live in Hawaii, you may have to think about that subtle difference, which realy makes no difference to those who do not reside in Hawai’i).

    One of the ironies of thes bills is a state senators from Maui said that since the non-resident property owners are protesting these bills so vigorously, they must not be paying their taxes. So here is a self righteous Hawaiian politician who pretends be advocating this legislation is not for vested intersts but rather for the sole good of Hawai’i while at the same time implying that others are cheating on their taxes. And where does she derive her moral compass and the right to pass judgement from? From her experience in politics of course.

  3. D.Halvorson Reply

    April 16, 2012 at 6:45 pm

    We whole-heartedly support the State of Hawaii’s need to enforce tax compliance regarding those who are not following the requirements of the laws.
    The requirement that all off-island vacation rental owners would be forced to have a licensed property manager is not the answer. We currently use the services of a great property management company but feel that it works best because its a partnership – it needs to be a choice.

  4. Linda Mitchell Reply

    April 16, 2012 at 7:15 pm

    Thank you for your discussion of these bills. I am a property owner of two rental condos on Maui, and I certainly want to run my business without a property manager. I am grateful for our many Canadian guests and am worried that these bills will certainly adversely affect the tourists. It is good to get out the information about why these bills have been proposed in the first place.

  5. Tim Hailey Reply

    April 16, 2012 at 10:46 pm

    Non-resident property owners in Hawaii are being unfairly targeted for contributing to the states tax revenue system. I have 3 condos on Maui which generate an excellent stream of tax revenue to the state of Hawaii. I proudly pay my taxes every month and don’t feel like I should be penalized for following the rules. Hawaii already has tax laws to penalize non paying vacation rentals. They need to enforce those laws and stop penalizing those of us that are paying our taxes.

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