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  • New Member 10 posts since
    Feb 22, 2012
    Currently Being Moderated
    660. Mar 8, 2012 6:03 PM (in response to ajl)
    Re: Hawaii Trying to Kill VRBO

    It's worth a lot! Outstanding piece of communication.

    Thank you for all the time and effort.

    gvk

     

     

     

     

     

    
> (Americas and Consular Affairs), Ottawa, Canada

    Ambassador Ron Kirk, U.S.  Trade Representative, Office of the United States Trade Representative
> , Washington, DC

    The Honorable Max Baucus, Chairman, Senate Committee on Finance, Washington, DC

    The Honorable Orrin G. Hatch, Ranking Member, Senate Committee on Finance, Washington, DC

    The Honorable Dave Camp, Chairman, House Committee on Ways & Means, Washington, DC

    The Honorable Sander M. Levin, Ranking Member, House Committee on Ways & Means, Washington, DC

    Senator Ron Wyden (Oregon), Chairman, Subcommittee on International Trade, Customs, and Global Competitiveness, Washington, DC

    Ambassador Gary Doer, Canadian Ambassador to the United States, Washington, DC

    Ambassador David Jacobson, United States Ambassador to Canada, Ottawa, Canada

    Consul General Cassie Doyle, Consul General of Canada in San Francisco (responsible for Northern California, Hawaii, and Nevada), San Francisco, California

    Mr. Perrin Beatty, 
> President and CEO, the Canadian Chamber of Commerce, Ottawa, Canada

     

     

    I start by saying that I am a responsible and documented part of the Hawaii Tourism Industry.  I respect United States sovereignty over its affairs, and that of the individual States over theirs.  So I do not consider it my place to offer a stance on this bill.  I do hope, however, that my input — to the extent it might reflect the principles that underpin your deliberations and debates — might be considered in your actions regarding your responsibilities related to this and similar pieces of legislation.

     

     

    My investment in the United States, in the State of Hawaii was shaped in part by the provisions and opportunities inherent in the “North American Free Trade Agreement” (NAFTA), which began on January 1, 1994.  This agreement removes most barriers to trade and investment among the United States, Canada, and Mexico.  My operation of this investment is fully in keeping with the scope and purpose of that Agreement, the requirements of all appropriate local, State, and United States tax laws, and is in accordance and compliance with the “United States — Canada Income Tax Convention,” a tax treaty between our two countries signed at Washington, D.C. on September 26,1980, and which entered into force on August 16, 1984.

     

     

    I make each of my properties available to vacationers to Hawaii through Vacation Rentals By Owner, where they are listed under www.vrbo.com/241190 and www.vrbo.com/357582.  I make all my own bookings.  My bookkeeper provides invoice and supplementary guest-contact support in this regard, and ensures collection and remittance of the Hawaii Transient Accommodation Tax and the General Excise Tax.  My accountant prepares my Canadian tax return for the Canada Revenue Agency.  And an IRS-qualified and recognized accountant makes all required filings to the Internal Revenue Service per its requirements and the “United States — Canada Income Tax Convention,” i.e., IRS form 1042 and Hawaii State Tax Form N-30.  These are not inexpensive services, but in my view, they are what’s required to operate responsibly and successfully.

     

     

    On the Hawaii State Legislature webpage, SB2089 SD1 is identified as follows:

     

     

    Measure Title:       RELATING TO TRANSIENT ACCOMMODATIONS.

     

    Report Title:          Nonresident Owners; Transient Accommodations

     

     

    Description:          Requires any nonresident owner who operates a transient accommodation located in the nonresident owner's private residence to employ a real estate broker or salesperson.  Requires any nonresident owner who operates a transient accommodation located in the nonresident owner's private residence in a condominium hotel to employ a condominium hotel operator.  Requires relevant information about owners of the transient accommodation to be provided to the department of taxation for enforcement purposes.  Requires the counties to provide the department of taxation with relevant owner information about every transient accommodation permitted by the respective counties annually.  Establishes fines for noncompliance.  Provides an exemption from the mandatory employment of a licensed real estate broker or salesperson or condominium hotel operator in certain circumstances.  (SD1)

     

    On this same Hawaii Start Legislature webpage, “Nonresident Owner” is defined as follows:

     

     

    Re: Hawaii Trying to Kill VRBOn 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.

     

     

    This and recent similar bills progressing through the Legislature make and apply to “nonresidents” management and operation standards and requirements from which “residents” are exempted.  And it is this distinction that forms the basis of my uncertainty about SB2089 SD1: Are not Canadians who are investors in Hawaii, and who have investments there to receive treatment no less favourable than the most favourable treatment accorded, in like circumstances, by the State to resident Hawaii investors and to investments of resident Hawaii investors?

     

     

    I referenced, earlier, North American Free Trade Agreement.  Signed by U.S.  President George H.W.  Bush, Mexican President Carlos Salinas, and Canadian Prime Minister Brian Mulroney, NAFTA came into effect on January 1, 1994.  Since that time, NAFTA has, for all three countries, generated economic growth and increasing standards of living.  In strengthening the rules and procedures governing trade and investment throughout the continent, NAFTA has opened doors for our countries.  As important, for each of us individuals, it has allowed us to make investments, create enterprise, and drive prosperity.

     

     

    I am not a legislator, a trade expert, or a NAFTA expert.  Nor am I a government official possessed of, or with in-house access to, this level of expertise.  I own a small business, and with my profits and personal savings, I have invested in these two properties in Hawaii.  So when, in trying to come to terms with SB2089 SD1 and similar recent Hawaii State Legislature bills that hold provisions for “nonresidents” that do not apply to “residents,” I turned to NAFTA, Chapter 11 (noting that “Party” means the United States, Mexico, and Canada):

     

     

    NAFTA Article 1102: National Treatment

    1.  Each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.

     

    2.  Each Party shall accord to investments of investors of another Party treatment no less favorable than that it accords, in like circumstances, to investments of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.

     

    3.  The treatment accorded by a Party under paragraphs 1 and 2 means, with respect to a state or province, treatment no less favorable than the most favorable treatment accorded, in like circumstances, by that state or province to investors, and to investments of investors, of the Party of which it forms a part.

     

    4.  For greater certainty, no Party may:

     

    (a) impose on an investor of another Party a requirement that a minimum level of equity in an enterprise in the territory of the Party be held by its nationals, other than nominal qualifying shares for directors or incorporators of corporations; or

    (b) require an investor of another Party, by reason of its nationality, to sell or otherwise dispose of an investment in the territory of the Party.

     

     

    I recognize that I may well be wrong in considering this NAFTA provision to be applicable to me, and to other Canadian citizens who have made cross-border investments in vacation accommodation properties in the United States, and who are unsure about SB2089 SD1.  But on the chance that I am not, and other current or potential Canadian investors find themselves in a similar position and are unsure about this and other Hawaii bills, accurate information on the NAFTA national treatment front might help shape the deliberations and debate by the Hawaii State Legislature.  That would be positive, and it is in this spirit that I am contributing.

     

     

    I am asking, therefore, that all recipients of this letter, including Hawaii State Legislators, use the expertise and resources available to them — which in both cases will be far superior to mine — to undertake to determine that such a legislative standard as proposed by the Hawaii State Legislature in SB2089 SD1 supports and upholds the spirit and intent of NAFTA, and the provisions and protections I have noted from Chapter 11, above.

     

     

    I do hope that in considering the purpose and intent of this and similar bills — if the purpose and intent are honourable and aimed at ensuring lawful participation by all Hawaii property owners offering transient accommodation in support for the schools, hospitals, services and infrastructure that keep Hawaii running — careful thought is given to all good and hard-working Americans and Canadians who have invested in Hawaii and, through payment of taxes, are contributing to a strong and economically viable Hawaii.

     

     

    As I said at the outset, I am a Canadian.  I am proud to have a documented business that attracts and accommodates visitors to the state, and which supports the Hawaii and United States economies through purchases made there to ensure the amenities and services are in place to make our guests’ stays exceptional.  I know that my voice does not factor in Hawaii State Legislature considerations, but I would hope that commitments our two countries have made to each other — and indeed, expectations that we have of each other through trade treaties and tax conventions — do.

     

     

    I realize NAFTA may seem a long ways away from the intent and purpose of this and similar Hawaii State legislature bills.  But in the case of Canada and the United States, this linkage is so very strong, and whether we think about it frequently or not at all, it very much defines the relationship between our two countries, and offers a standard of treatment to which countries around the globe aspire, and in which they seek to participate.  And for this reason, too, I think that care must be taken not to weaken this standard of treatment.

     

     

    The Government of Canada makes some helpful findings of the importance of this relationship on its website http://www.canadainternational.gc.ca/washington.  It notes that:

     

     

    Trade between the United States and Canada is huge and growing.  Total trade between the two countries was worth $676 billion in 2008 — more than one million dollars a minute.

     

    Canada is the top purchaser of U.S.  exports, which was $248.2 billion in 2010.

     

    Canada is the biggest export market for U.S.  products, ranked Number 1 in 34 states as the leading export market for goods in 2008, and Number 2 in 11 others.

     

    More than 8 million U.S.  jobs depend on trade with Canada.  That’s 4.4% of total U.S.  employment — 1 in 23 American jobs depends on free and open trade with Canada.

     

    In Hawaii, in 2008, 40,465 jobs, or 4.6% of the total jobs in the state were related to trade with Canada. In that same year, almost $2.38 billion of the Hawaii’s output, or 3.7%, was related to trade with Canada.  (Source: U.S.-Canada Trade and U.S.  State-Level Production and Employment: 2008; Laura M.  Baughman and Joseph Francois)

     

     

    Trade and investment flow both ways, and data showing the importance of the United States to Canada are just as impressive indicators of the power of the trade and investment relationship between our two countries.  When advancing these facts, the same Government of Canada webpage notes that these gains underscore the need for making sure that our border remains open to trade.  And United States government webpages make the same assertion; government policy on either side of the border that hinders or weakens investment costs jobs in every state and every province — and, I think it is fair to say, given our relationship, hinders confidence in others around the globe who would consider investing in our countries.

     

     

    The US Department of State website (http://www.state.gov/s/l/c3439.htm) offers additional clarity on the matters raised above, when it advises:

     

     

    Chapter Eleven of the North American Free Trade Agreement (the "NAFTA") contains provisions designed to protect cross-border investors and facilitate the settlement of investment disputes.  For example, each NAFTA Party must accord investors from the other NAFTA Parties national (i.e. non-discriminatory) treatment and may not expropriate investments of those investors except in accordance with international law.  Chapter Eleven permits an investor of one NAFTA Party to seek money damages for measures of one of the other NAFTA Parties that allegedly violate those and other provisions of Chapter Eleven.

     

     

    Hawaii State Legislature bill SB2089 SD1 and others like it appear to be aimed at making sure that all who benefit from Hawaii and the United States contribute as required to keep Hawaii, and the United States running.  We have precisely the same obligation where we live here in Victoria, in the Province of British Columbia, located in the country of Canada.

     

     

    In these difficult economic times, it seems practical for any government to pursue tax scofflaws, law breakers, and free-riders whose choices not to participate in proper documentation, remittance, and compliance hurt us all.  But to do so the manner of Hawaii State Legislature bill SB2089 SD1, would appear to contravene the obligations of the State as committed to by the United States in affixing its signature to NAFTA on behalf of the states.  And in these difficult times, it seems an unhelpful thing to let stand any policy or legislative initiative which tells current investors that despite the intent, promise, and security of NAFTA, its provisions and protections are meaningless, and their investment in the United States is as risky as, or is perhaps riskier than, an investment in a jurisdiction without a trade agreement.

     

     

    I would hope that all who read this would provide input to Hawaii State Legislature bill SB2089 SD1 and others like it to ensure they achieve State objectives and achieve the commitments, provisions, and promise of NAFTA.  This bill, and others like it that have been written or amended in the past month, would appear to fail the required standard of providing Canadian investors with “treatment no less favorable than the most favorable treatment accorded, in like circumstances, by that state or province to investors, and to investments of investors, of the Party of which it forms a part.”

     

     

    So if NAFTA shaped these cross-border investments by individuals, or if it governs their treatment in either country, it seems to me that action by a state to impose a different standard of operation on real estate investments by Canadian owners not resident in the state — or by a province on real estate investments by Americans not resident in the province — undermines NAFTA and creates significant tax liabilities for governments in both countries.  And this would be a terrible course of action for both our countries.  It seems quite possible to me that if one state can advance legislation to change the rules of NAFTA to impose different standards and costs on Canadian investors, legislative creep could see other states do the same, and in time, Canadian provinces undertaking the same course to target Americans who own property in Canada. I think we owe each other better, but I concede that for all manner of government, these are difficult and desperate times.  Perhaps SB2089 SD1 correctly signals that the time for trade agreements has passed.

     

     

    In closing, irrespective of tax treaties and trade agreements that make my ownership of two properties in the United States possible, it always has been and continues to be a privilege that I am able to do so.  I work very hard to provide an exceptional guest experience, and I am proud of my success in attracting visitors from around the globe to Hawaii, Maui, and Hale Kai O’ Kihei.  And yes, to my two apartments there.  And part of the reward in this is knowing that I am making all tax collections and remittances to support the schools, hospitals and infrastructure that are essential to life, community, and opportunity in Kihei, Maui, and Hawaii, and that I value just as highly here, and support through my Canadian tax compliance.

     

     

    But I would request that if the Legislature were simply aiming to make all owners as responsible as those who are obeying all the tax and other laws, they might reach out to those of us with State of Hawaii Tax Identification Numbers and Internal Revenue Service Tax Identification Numbers so that we could work together to demonstrate progressive ways to enter into compliance and make filings and remittances that are essential to the services and programs and thus the security and prosperity of Hawaii and the United States.

     

     

    We care, and we would help.

     

     

    There are thousands of good and willing people amongst those who have the privilege of owning rental properties in Hawaii.  I know they would work with the State to assist others to achieve the standard of responsibility.  Even given my status as a foreigner, I would be willing to help.  There are ways to secure the participation of those who are not in compliance with Hawaii and United States tax requirements without sapping the strength or support of those who are, and importantly — which I fear is the case with SB2089 SD1 — without disregarding the commitments and protections that give credibility, strength, force, and stature to NAFTA.

     

     

    The benefit of owning a vacation or ‘transient’ accommodation in Hawaii or in any state or province should not be limited to the owner, nor end with the purchase of the property by an owner.  As so many law-abiding, tax-collecting, and -remitting owners have proven — be they American, Canadian, or of other nationality — that purchase can be and is the start of the flowing of benefits to all who call the location of the investment home, and choose to visit it, too.

     

     

    I hope that’s a point upon which we can build and work together, and one that would see us do so while upholding responsibilities, protections, and commitments under NAFTA.

     

     

    I wish you the best in your deliberations throughout this legislative session.  I hope that you will use your expertise and resources, and seek and welcome same from others, to determine that such a legislative standard as proposed by the Hawaii State Legislature in SB2089 SD1 supports and upholds the spirit and intent of NAFTA, and the provisions and protections I have noted from Chapter 11, above.

     

     

    Sincerely,

     

     

    Adam

     

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  • sodamo Contributor 260 posts since
    Nov 5, 2011
    Currently Being Moderated
    661. Mar 8, 2012 7:23 PM (in response to cruisin9)
    Re: Hawaii Trying to Kill VRBO
    3/6/2012HReceived from Senate (Sen. Com. No. 66) in amended form (SD 1).
    3/8/2012HPass First Reading
    3/8/2012HReferred to TOU, CPC/JUD, FIN, referral sheet 41
  • Contributor 93 posts since
    Feb 20, 2012
    Currently Being Moderated
    662. Mar 8, 2012 7:29 PM (in response to sodamo)
    Re: Hawaii Trying to Kill VRBO

    Tell me it isn't so.

  • kazoom Contributor 40 posts since
    Feb 20, 2012
    Currently Being Moderated
    663. Mar 8, 2012 7:35 PM (in response to sodamo)
    Re: Hawaii Trying to Kill VRBO

    I think this is actually good. First step is introducing it in the House and next is committee assignments. Since its being assigned to four committees, that will take up some time.  Judiciary and Finance will hopefully be taking close looks at the issues. And CPN already deferred the House version so maybe there's hope they'll do the same with this one.

  • Contributor 144 posts since
    Feb 21, 2012
    Currently Being Moderated
    664. Mar 8, 2012 7:48 PM (in response to kazoom)
    Re: Hawaii Trying to Kill VRBO

    So should we be sending testimony to these committees?  Will they read what was already submitted?  I don't even know that the initials stand for except presumable FIN means some kind of Finance Committee.

     

    Oh and btw, I got the same form letter response from the ACLU that others have posted on here. 

     

    Thank you for bringing this bill to our attention.  The ACLU of Hawaii legislative program will consider the impact of S.B 2089 on civil rights and whether we should take action.  You may wish to make your concerns known to the legislators who sit on the committees that will hear the bill and continue to submit testimony when the bill comes up for hearing.  See http://www.capitol.hawaii.gov/measure_indiv.aspx?billtype=SB&billnumber=2089 for more information. 

     

    Thank you for contacting the ACLU of Hawaii.

  • Contributor 175 posts since
    Feb 22, 2012
    Currently Being Moderated
    665. Mar 8, 2012 8:07 PM (in response to sodamo)
    Re: Hawaii Trying to Kill VRBO

    The bill as passed by the senate is very different than what we've been looking at:

     

    http://www.capitol.hawaii.gov/session2012/Bills/SB2089_.HTM

     

    I think that's an older version, but as they don't date anything on the web site, it's hard to tell.

  • New Member 6 posts since
    Mar 6, 2012
    Currently Being Moderated
    666. Mar 8, 2012 9:42 PM (in response to cruisin9)
    Re: Hawaii Trying to Kill VRBO

    The next committee hearing has been set and testimony is being accepted.  http://www.capitol.hawaii.gov/measure_indiv.aspx?billtype=SB&billnumber=2089

  • Contributor 144 posts since
    Feb 21, 2012
    Currently Being Moderated
    667. Mar 8, 2012 9:59 PM (in response to mroberts7)
    Re: Hawaii Trying to Kill VRBO
    The Tourism Committee is hearing the bill on Monday, 3/12 at 9:30 am.  See link below.  Seems like we should submit testimony and/or directly email the committee members. 

    Chair

    Tom Brower
    House District 23
    Hawaii State Capitol, Room 315
    phone: 808-586-8520
    fax:
    repbrower@Capitol.hawaii.gov

    Vice-Chair

    James Kunane Tokioka
    House District 15
    Hawaii State Capitol, Room 322
    phone: 808-586-6270
    fax: 808-586-6271
    reptokioka@Capitol.hawaii.gov

    Members:
    Rep. Awana - fax: 808-586-8469
    repawana@Capitol.hawaii.gov

    Rep. Choy - fax: 808-586-8479
    repchoy@capitol.hawaii.gov

    Rep. Evans - fax: 808-586-8514
    repevans@Capitol.hawaii.gov - she met with some Oahu owners who were against the bill and has heard our concerns

    Rep. Hashem
    fax: 808-586-6511
    rephashem@capitol.hawaii.gov

    Rep. McKelvey
    fax: 808-586-6161
    repmckelvey@Capitol.hawaii.gov

    Rep. Nishimoto
    fax: 808-586-8519
    repnishimoto@Capitol.hawaii.gov

    Rep. Tsuji
    fax: 808-586-8484
    reptsuji@Capitol.hawaii.gov

    Rep. Ching
    fax: 808-586-9421
    repching@Capitol.hawaii.gov

    Rep. Marumoto
    fax: 808-586-6311
    repmarumoto@Capitol.hawaii.gov

     

    Hearing TOU-INT 03-12-12.

     

    www.capitol.hawaii.gov

    Requires all fee time share interests to be recorded in    the regular system rather than the land court.  Streamlines the procedure for    the office of the assistant registrar to update the certificates of title for all remaining fee time share interests as part of the deregistration process...

  • New Member 6 posts since
    Mar 6, 2012
    Currently Being Moderated
    668. Mar 8, 2012 10:20 PM (in response to mvaughn)
    Re: Hawaii Trying to Kill VRBO

    I sent emails off to the committee already and received this response:

     

    Thank you for your e-mail.  However, given the volume of e-mail, "blast

    e-mail," and "junk mail," I am not able to read and respond to each and

    every one in a timely manner.  For matters that require immediate

    attention, please call me at 586-6200 or fax me at 586-6201.  Sincerely, it

    is often easier for me and more expedient for you to have me respond over

    the phone than through e-mail.

     

     

     

    Sorry, we will not process any testimony received at this e-mail address.

    Please submit all testimony on bills or resolutions to our Capitol Web page

    at:  http://www.capitol.hawaii.gov/submittestimony.aspx.  Thank you.

     

     

     

     

     

    Representative Marcus R. Oshiro

     

    Chair, Committee on Finance

    District 39

  • Contributor 144 posts since
    Feb 21, 2012
    Currently Being Moderated
    669. Mar 8, 2012 10:40 PM (in response to mroberts7)
    Re: Hawaii Trying to Kill VRBO

    Here is what they want us to do:

     

    Persons wishing to offer comments should submit testimony at least 24 hours prior to the hearing with a transmittal cover indicating:

    • Testifier's name with position/title and organization;
    • The Committee the comments are directed to;
    • The date and time of the hearing;
    • Measure number; and
    • The number of copies the Committee is requesting. 

     

    While every effort will be made to copy, organize, and collate all testimony received, materials received on the day of the hearing or improperly identified or directed to the incorrect office, may be distributed to the Committee after the hearing.

     

    Submit testimony in ONE of the following ways:

    PAPER:  5 copies (including an original) to Room 315 in the State Capitol;

    EMAIL: For comments less than 5 pages in length, transmit to TOUtestimony@Capitol.hawaii.gov ; or

    WEB:      For comments less than 10MB in size, transmit from http://www.capitol.hawaii.gov/submittestimony.aspx.

  • Contributor 144 posts since
    Feb 21, 2012
    Currently Being Moderated
    670. Mar 8, 2012 10:41 PM (in response to mvaughn)
    Re: Hawaii Trying to Kill VRBO

    I emailed the committee members directly, submitted testimony at the website and sent an email to the TOUtestimony address.  Maybe SOMEONE will read it!

  • jwe Contributor 284 posts since
    Feb 18, 2012
    Currently Being Moderated
    671. Mar 8, 2012 11:57 PM (in response to ajl)
    Re: Hawaii Trying to Kill VRBO

    Adam,

     

    That is a fantastic letter. 

    Can you a email me a pdf copy to jeckel@pinninvest.com

    I will create a link to it in dropbox so others can attach to their testimony.

    Mahalo

     

      
(Americas and Consular Affairs), Ottawa, Canada

     

    *     Ambassador Ron Kirk, U.S.  Trade Representative, Office of the United States Trade Representative
, Washington, DC

     

    *     The Honorable Max Baucus, Chairman, Senate Committee on Finance, Washington, DC

     

    *     The Honorable Orrin G. Hatch, Ranking Member, Senate Committee on Finance, Washington, DC

     

    *     The Honorable Dave Camp, Chairman, House Committee on Ways & Means, Washington, DC

     

    *     The Honorable Sander M. Levin, Ranking Member, House Committee on Ways & Means, Washington, DC

     

    *     Senator Ron Wyden (Oregon), Chairman, Subcommittee on International Trade, Customs, and Global Competitiveness, Washington, DC

     

    *     Ambassador Gary Doer, Canadian Ambassador to the United States, Washington, DC

     

    *     Ambassador David Jacobson, United States Ambassador to Canada, Ottawa, Canada

     

    *     Consul General Cassie Doyle, Consul General of Canada in San Francisco (responsible for Northern California, Hawaii, and Nevada), San Francisco, California

     

    *     Mr. Perrin Beatty, 
President and CEO, the Canadian Chamber of Commerce, Ottawa, Canada

     

    I start by saying that I am a responsible and documented part of the Hawaii Tourism Industry.  I respect United States sovereignty over its affairs, and that of the individual States over theirs.  So I do not consider it my place to offer a stance on this bill.  I do hope, however, that my input — to the extent it might reflect the principles that underpin your deliberations and debates — might be considered in your actions regarding your responsibilities related to this and similar pieces of legislation.

     

    My investment in the United States, in the State of Hawaii was shaped in part by the provisions and opportunities inherent in the “North American Free Trade Agreement” (NAFTA), which began on January 1, 1994.  This agreement removes most barriers to trade and investment among the United States, Canada, and Mexico.  My operation of this investment is fully in keeping with the scope and purpose of that Agreement, the requirements of all appropriate local, State, and United States tax laws, and is in accordance and compliance with the “United States — Canada Income Tax Convention,” a tax treaty between our two countries signed at Washington, D.C. on September 26,1980, and which entered into force on August 16, 1984.

     

    I make each of my properties available to vacationers to Hawaii through Vacation Rentals By Owner, where they are listed under www.vrbo.com/241190 and www.vrbo.com/357582.  I make all my own bookings.  My bookkeeper provides invoice and supplementary guest-contact support in this regard, and ensures collection and remittance of the Hawaii Transient Accommodation Tax and the General Excise Tax.  My accountant prepares my Canadian tax return for the Canada Revenue Agency.  And an IRS-qualified and recognized accountant makes all required filings to the Internal Revenue Service per its requirements and the “United States — Canada Income Tax Convention,” i.e., IRS form 1042 and Hawaii State Tax Form N-30.  These are not inexpensive services, but in my view, they are what’s required to operate responsibly and successfully.

     

    On the Hawaii State Legislature webpage, SB2089 SD1 is identified as follows:

     

    Measure Title:       RELATING TO TRANSIENT ACCOMMODATIONS.

     

    Report Title:          Nonresident Owners; Transient Accommodations

     

    Description:          Requires any nonresident owner who operates a transient accommodation located in the nonresident owner's private residence to employ a real estate broker or salesperson.  Requires any nonresident owner who operates a transient accommodation located in the nonresident owner's private residence in a condominium hotel to employ a condominium hotel operator.  Requires relevant information about owners of the transient accommodation to be provided to the department of taxation for enforcement purposes.  Requires the counties to provide the department of taxation with relevant owner information about every transient accommodation permitted by the respective counties annually.  Establishes fines for noncompliance.  Provides an exemption from the mandatory employment of a licensed real estate broker or salesperson or condominium hotel operator in certain circumstances.  (SD1)

     

    On this same Hawaii Start Legislature webpage, “Nonresident Owner” is defined as follows:

     

    Re: Hawaii Trying to Kill VRBOn 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.

     

    This and recent similar bills progressing through the Legislature make and apply to “nonresidents” management and operation standards and requirements from which “residents” are exempted.  And it is this distinction that forms the basis of my uncertainty about SB2089 SD1: Are not Canadians who are investors in Hawaii, and who have investments there to receive treatment no less favourable than the most favourable treatment accorded, in like circumstances, by the State to resident Hawaii investors and to investments of resident Hawaii investors?

     

    I referenced, earlier, North American Free Trade Agreement.  Signed by U.S.  President George H.W.  Bush, Mexican President Carlos Salinas, and Canadian Prime Minister Brian Mulroney, NAFTA came into effect on January 1, 1994.  Since that time, NAFTA has, for all three countries, generated economic growth and increasing standards of living.  In strengthening the rules and procedures governing trade and investment throughout the continent, NAFTA has opened doors for our countries.  As important, for each of us individuals, it has allowed us to make investments, create enterprise, and drive prosperity.

     

    I am not a legislator, a trade expert, or a NAFTA expert.  Nor am I a government official possessed of, or with in-house access to, this level of expertise.  I own a small business, and with my profits and personal savings, I have invested in these two properties in Hawaii.  So when, in trying to come to terms with SB2089 SD1 and similar recent Hawaii State Legislature bills that hold provisions for “nonresidents” that do not apply to “residents,” I turned to NAFTA, Chapter 11 (noting that “Party” means the United States, Mexico, and Canada):

     

    NAFTA Article 1102: National Treatment

     

    *     1.  Each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.

     

    *     2.  Each Party shall accord to investments of investors of another Party treatment no less favorable than that it accords, in like circumstances, to investments of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.

     

    *     3.  The treatment accorded by a Party under paragraphs 1 and 2 means, with respect to a state or province, treatment no less favorable than the most favorable treatment accorded, in like circumstances, by that state or province to investors, and to investments of investors, of the Party of which it forms a part.

     

    *     4.  For greater certainty, no Party may:

     

    (a) impose on an investor of another Party a requirement that a minimum level of equity in an enterprise in the territory of the Party be held by its nationals, other than nominal qualifying shares for directors or incorporators of corporations; or

     

    (b) require an investor of another Party, by reason of its nationality, to sell or otherwise dispose of an investment in the territory of the Party.

     

     

     

     

    I recognize that I may well be wrong in considering this NAFTA provision to be applicable to me, and to other Canadian citizens who have made cross-border investments in vacation accommodation properties in the United States, and who are unsure about SB2089 SD1.  But on the chance that I am not, and other current or potential Canadian investors find themselves in a similar position and are unsure about this and other Hawaii bills, accurate information on the NAFTA national treatment front might help shape the deliberations and debate by the Hawaii State Legislature.  That would be positive, and it is in this spirit that I am contributing.

     

    I am asking, therefore, that all recipients of this letter, including Hawaii State Legislators, use the expertise and resources available to them — which in both cases will be far superior to mine — to undertake to determine that such a legislative standard as proposed by the Hawaii State Legislature in SB2089 SD1 supports and upholds the spirit and intent of NAFTA, and the provisions and protections I have noted from Chapter 11, above.

     

    I do hope that in considering the purpose and intent of this and similar bills — if the purpose and intent are honourable and aimed at ensuring lawful participation by all Hawaii property owners offering transient accommodation in support for the schools, hospitals, services and infrastructure that keep Hawaii running — careful thought is given to all good and hard-working Americans and Canadians who have invested in Hawaii and, through payment of taxes, are contributing to a strong and economically viable Hawaii.

     

    As I said at the outset, I am a Canadian.  I am proud to have a documented business that attracts and accommodates visitors to the state, and which supports the Hawaii and United States economies through purchases made there to ensure the amenities and services are in place to make our guests’ stays exceptional.  I know that my voice does not factor in Hawaii State Legislature considerations, but I would hope that commitments our two countries have made to each other — and indeed, expectations that we have of each other through trade treaties and tax conventions — do.

     

    I realize NAFTA may seem a long ways away from the intent and purpose of this and similar Hawaii State legislature bills.  But in the case of Canada and the United States, this linkage is so very strong, and whether we think about it frequently or not at all, it very much defines the relationship between our two countries, and offers a standard of treatment to which countries around the globe aspire, and in which they seek to participate.  And for this reason, too, I think that care must be taken not to weaken this standard of treatment.

     

    The Government of Canada makes some helpful findings of the importance of this relationship on its website http://www.canadainternational.gc.ca/washington.  It notes that:

     

    *     Trade between the United States and Canada is huge and growing.  Total trade between the two countries was worth $676 billion in 2008 — more than one million dollars a minute.

     

    *     Canada is the top purchaser of U.S.  exports, which was $248.2 billion in 2010.

     

    *     Canada is the biggest export market for U.S.  products, ranked Number 1 in 34 states as the leading export market for goods in 2008, and Number 2 in 11 others.

     

    *     More than 8 million U.S.  jobs depend on trade with Canada.  That’s 4.4% of total U.S.  employment — 1 in 23 American jobs depends on free and open trade with Canada.

     

    *     In Hawaii, in 2008, 40,465 jobs, or 4.6% of the total jobs in the state were related to trade with Canada. In that same year, almost $2.38 billion of the Hawaii’s output, or 3.7%, was related to trade with Canada.  (Source: U.S.-Canada Trade and U.S.  State-Level Production and Employment: 2008; Laura M.  Baughman and Joseph Francois)

     

    Trade and investment flow both ways, and data showing the importance of the United States to Canada are just as impressive indicators of the power of the trade and investment relationship between our two countries.  When advancing these facts, the same Government of Canada webpage notes that these gains underscore the need for making sure that our border remains open to trade.  And United States government webpages make the same assertion; government policy on either side of the border that hinders or weakens investment costs jobs in every state and every province — and, I think it is fair to say, given our relationship, hinders confidence in others around the globe who would consider investing in our countries.

     

    The US Department of State website (http://www.state.gov/s/l/c3439.htm) offers additional clarity on the matters raised above, when it advises:

     

    Chapter Eleven of the North American Free Trade Agreement (the "NAFTA") contains provisions designed to protect cross-border investors and facilitate the settlement of investment disputes.  For example, each NAFTA Party must accord investors from the other NAFTA Parties national (i.e. non-discriminatory) treatment and may not expropriate investments of those investors except in accordance with international law.  Chapter Eleven permits an investor of one NAFTA Party to seek money damages for measures of one of the other NAFTA Parties that allegedly violate those and other provisions of Chapter Eleven.

     

    Hawaii State Legislature bill SB2089 SD1 and others like it appear to be aimed at making sure that all who benefit from Hawaii and the United States contribute as required to keep Hawaii, and the United States running.  We have precisely the same obligation where we live here in Victoria, in the Province of British Columbia, located in the country of Canada.

     

    In these difficult economic times, it seems practical for any government to pursue tax scofflaws, law breakers, and free-riders whose choices not to participate in proper documentation, remittance, and compliance hurt us all.  But to do so the manner of Hawaii State Legislature bill SB2089 SD1, would appear to contravene the obligations of the State as committed to by the United States in affixing its signature to NAFTA on behalf of the states.  And in these difficult times, it seems an unhelpful thing to let stand any policy or legislative initiative which tells current investors that despite the intent, promise, and security of NAFTA, its provisions and protections are meaningless, and their investment in the United States is as risky as, or is perhaps riskier than, an investment in a jurisdiction without a trade agreement.

     

    I would hope that all who read this would provide input to Hawaii State Legislature bill SB2089 SD1 and others like it to ensure they achieve State objectives and achieve the commitments, provisions, and promise of NAFTA.  This bill, and others like it that have been written or amended in the past month, would appear to fail the required standard of providing Canadian investors with “treatment no less favorable than the most favorable treatment accorded, in like circumstances, by that state or province to investors, and to investments of investors, of the Party of which it forms a part.”

     

    So if NAFTA shaped these cross-border investments by individuals, or if it governs their treatment in either country, it seems to me that action by a state to impose a different standard of operation on real estate investments by Canadian owners not resident in the state — or by a province on real estate investments by Americans not resident in the province — undermines NAFTA and creates significant tax liabilities for governments in both countries.  And this would be a terrible course of action for both our countries.  It seems quite possible to me that if one state can advance legislation to change the rules of NAFTA to impose different standards and costs on Canadian investors, legislative creep could see other states do the same, and in time, Canadian provinces undertaking the same course to target Americans who own property in Canada. I think we owe each other better, but I concede that for all manner of government, these are difficult and desperate times.  Perhaps SB2089 SD1 correctly signals that the time for trade agreements has passed.

     

    In closing, irrespective of tax treaties and trade agreements that make my ownership of two properties in the United States possible, it always has been and continues to be a privilege that I am able to do so.  I work very hard to provide an exceptional guest experience, and I am proud of my success in attracting visitors from around the globe to Hawaii, Maui, and Hale Kai O’ Kihei.  And yes, to my two apartments there.  And part of the reward in this is knowing that I am making all tax collections and remittances to support the schools, hospitals and infrastructure that are essential to life, community, and opportunity in Kihei, Maui, and Hawaii, and that I value just as highly here, and support through my Canadian tax compliance.

     

    But I would request that if the Legislature were simply aiming to make all owners as responsible as those who are obeying all the tax and other laws, they might reach out to those of us with State of Hawaii Tax Identification Numbers and Internal Revenue Service Tax Identification Numbers so that we could work together to demonstrate progressive ways to enter into compliance and make filings and remittances that are essential to the services and programs and thus the security and prosperity of Hawaii and the United States.

     

    We care, and we would help.

     

    There are thousands of good and willing people amongst those who have the privilege of owning rental properties in Hawaii.  I know they would work with the State to assist others to achieve the standard of responsibility.  Even given my status as a foreigner, I would be willing to help.  There are ways to secure the participation of those who are not in compliance with Hawaii and United States tax requirements without sapping the strength or support of those who are, and importantly — which I fear is the case with SB2089 SD1 — without disregarding the commitments and protections that give credibility, strength, force, and stature to NAFTA.

     

    The benefit of owning a vacation or ‘transient’ accommodation in Hawaii or in any state or province should not be limited to the owner, nor end with the purchase of the property by an owner.  As so many law-abiding, tax-collecting, and -remitting owners have proven — be they American, Canadian, or of other nationality — that purchase can be and is the start of the flowing of benefits to all who call the location of the investment home, and choose to visit it, too.

     

    I hope that’s a point upon which we can build and work together, and one that would see us do so while upholding responsibilities, protections, and commitments under NAFTA.

     

    I wish you the best in your deliberations throughout this legislative session.  I hope that you will use your expertise and resources, and seek and welcome same from others, to determine that such a legislative standard as proposed by the Hawaii State Legislature in SB2089 SD1 supports and upholds the spirit and intent of NAFTA, and the provisions and protections I have noted from Chapter 11, above.

     

    Sincerely,

     

    Adam

     

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  • New Member 20 posts since
    Mar 5, 2012
    Currently Being Moderated
    672. Mar 9, 2012 1:07 AM (in response to ajl)
    Re: Hawaii Trying to Kill VRBO

    Adam:

     

    That is one of the most well written letters I have EVER read.  You are thorough, detailed and fact based.  You have presented this very complex subject in a way that, I hope, even a politician will take note of.  I am so glad you have sent this letter to every administrative level that could take action in response to this Bill.

     

    I applaud you.

  • New Member 14 posts since
    Mar 2, 2012
    Currently Being Moderated
    673. Mar 9, 2012 1:57 AM (in response to cruisin9)
    Re: Hawaii Trying to Kill VRBO

    Folks, some intersting historical informationdug up by my husband from 2007 when similar legislation was pursued and failed.  One is the proposed legislation, the other is a letter from none other than the Department of Taxation, with their opinion of the need for such legislation.  They conducted 123 audits at the time to assess the need for the legislation and concluded "that for the most part, transient accomodation providers are tax compliant".  They further concluded that the propsed legislation was questionable, burdensome and and unnecessary.  This new legislation does not provide any new findings to the contrary.  Strange that we haven't seen this anywhere in the testimony or on the discussion boards anywhere.  Please post it anywhere you think it will be beneficial to do so, to get the voice of reason and facts speak instead of fearmongering.

  • anja Senior Contributor 1,556 posts since
    Aug 9, 2011
    Currently Being Moderated
    674. Mar 9, 2012 2:13 AM (in response to mauilizard)
    Re: Hawaii Trying to Kill VRBO

    The 2007 audit was mentioned...here on this forum....and in testimony {in my testimony}.

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