Hawaii’s property tax will increase by as much as 9.3 percent in 2017, and the state will lose $1.5 billion in revenue, according to the Office of Property Assessment.
The increase in the tax is part of the new $500 million bond for 2017.
The state is currently facing a budget shortfall of $2.3 billion.
Hawaii’s property taxes will increase, according the Office, and as a result, businesses in the state could lose an estimated $1 billion in tax revenue.
“We are committed to working with state and local officials to address the state’s financial problems and to find a way to reduce the impact of the proposed increase in property taxes on our economy,” the Office wrote in a statement.
According to the Hawaii Business and Economic Development Corp., the property tax hike will cost the state about $1,500 in revenue per year.
Businesses in Hawaii, who make up the bulk of its population, rely heavily on sales tax revenue to pay for basic operations, like paying the bills, paying rent, and paying payroll.
But businesses are also affected by a new measure in the 2017 state budget that allows the state to add negative effects to the taxes.
Under the law, a property owner with a $1 million annual income who also owns a $5 million property could face a $400 increase in their property tax bill.
That increases to $800 per year for a $10 million income.
If that person has a $200,000 annual income and a $600,000 property, they would be facing a $3,000 increase.
The new property tax levy will affect the statewide average property tax rate, which was 0.86 percent in 2016, according data from the Hawaii State Treasurer’s Office.
The current tax rate for 2017 is 0.87 percent.
Property tax hikes will also have an impact on the state of Hawaii’s tourism industry, which relies heavily on the sale of state-owned properties.
A total of 3.5 million Hawaii hotel rooms were booked through the end of June, according hotel data provider Hotels.com.
This year, the Honolulu Marriott Hotel and Suites and Hawaiian Princess are slated to lose at least $2 million in hotel revenue due to the increase in Hawaii’s state property tax.
As part of this effort to reduce state revenue losses, the state also announced it will increase the amount of property tax revenue it collects from the Honolulu Convention Center and Honolulu Marriott Marquis to $2 billion for the first three years of the measure.
Additionally, Hawaii Gov.
David Ige, who is also a member of the Joint Economic Committee, said in a release that he will not veto the state budget on July 15.
Ige said he is working to raise the state revenue from the bond measures to $3.6 billion by 2020.
“Our state is facing financial problems.
It is time to act on the issues we have to address, including tax reform, which will provide certainty to Hawaii’s economy, create jobs, and improve the quality of life for our people,” Ige wrote.
“As we continue to work to reduce our state’s debt, the bond package, along with our comprehensive tax plan, is one of our best options,” Iglesaid.
The Associated Press contributed to this report.