Senate Bill 2696, which the Senate has just given to the House for consideration, is a bill “Relating to Green Fees.” These green fees have nothing to do with playing golf, however; they are per visitor, per stay charges the money from which goes to protect and preserve the environment. Some national governments already charge them, including the Republic of Palau, New Zealand, and the Maldives. So, SB 2696 is calling for a feasibility study and implementation plan, assuming that the fee will be charged beginning in 2022.
The State Office of Planning is budgeting the cost of such a study at $450,000.
Let’s save our money, folks. No other state in the United States charges such a fee. Not because they don’t want to, but because it’s unconstitutional.
A very long time ago, in 1865 to be exact, Nevada passed a law imposing a tax of one dollar upon every person leaving the state by any railroad, stagecoach, or other common carrier. (I said this was a long time ago. Motor buses with internal combustion engines hadn’t been invented yet.)
Mr. Crandall, who was employed by a stagecoach company, challenged the tax. The Nevada Supreme Court sustained it, and an appeal brought the case to the U.S. Supreme Court. That case, Crandall v. Nevada, 73 U.S. 35 (1867), established the constitutional right to travel and struck the tax down.
“We are all citizens of the United States,” the opinion says, “and as members of the same community must have the right to pass and repass through every part of it without interruption, as freely as in our own states. And a tax imposed by a state for entering its territories or harbors is inconsistent with the rights which belong to citizens of other states as members of the Union and with the objects which that Union was intended to attain. Such a power in the states could produce nothing but discord and mutual irritation, and they very clearly do not possess it.”
A green fee imposed on a per passenger, per stay basis is very similar to the Nevada departure tax that the Court voided. First, let’s call it what it is: it’s a tax. Court cases, including some from the Hawaii Supreme Court, have worked on drawing a line between user fees and taxes, and the imposition envisioned by SB 2696 supports the operations of government, and a taxpayer gets no particular benefit for paying it. That makes the imposition fall on the “tax” side of the line.
Does the proposed tax have any features that justify treating it differently from the Nevada departure tax? Both burden the right of any American to travel freely between the states, so the answer appears to be no.
Well then, what about if the tax were imposed only on international departures? Constitutional problems pop up here, too, because only the federal government may discriminate between citizens and foreigners in applying taxes. According to a more recent Supreme Court case, Kraft General Foods v. Iowa, 505 U.S. 71 (1992), the Foreign Commerce Clause of the U.S. Constitution creates this prohibition. Why? Discriminatory treatment of foreign commerce may create problems, such as the potential for international retaliation, that concern the nation as a whole. So, the Feds can impose cases discriminating against foreign visitors, but the States can’t.
Maybe we should just limit our green fees in Hawaii to charges for playing golf.
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Tom Yamachika is the President of the Tax Foundation of Hawaii, a private, nonprofit educational organization dedicated to informing the taxpaying public about the finances of our state and local governments in Hawaii. Tom is also a tax attorney in solo practice and has been since early 2013. Prior to 2013, he was with the accounting firm Accuity LLP, which was formed in 2006 from the Honolulu office of Coopers & Lybrand (which later became PricewaterhouseCoopers). Before that, he served as an Administrative Rules Specialist in the State of Hawaii Department of Taxation from 1994 to 1996, where he drafted rules, interpretive releases, and legislation on several different state taxes. Prior to that, he practiced litigation and tax law with Cades Schutte Fleming & Wright in Honolulu.