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  • Contributor 40 posts since
    Feb 25, 2012
    Currently Being Moderated
    720. Mar 11, 2012 9:09 AM (in response to jwe)
    Re: Hawaii Trying to Kill VRBO

    Absolutely the state could file liens.  Anybody can file a lien against someone else if they have just cause.  The state could do that, and collect additional fines, penalties and interest until the debt is paid.  And obviously there are means of determining who is not paying now.  If there are 5% of owners not paying, the amount of expense it would take for enforcement officers to find them by simply looking at website listings and comparing them to  tax records would easily be covered just by penalties and interest.  How long does it take to look up one listing?   Let's be generous and say it takes two minutes.  How long would it take to look up the tax receipts record?  With everything being computerized these days, it shouldn't take anymore than two minutes either.  So you could look up one person in 4 minutes.  Finding one in 20 then would take 80 minutes.  If that scofflaw hasn't paid in just one year, let's say he rented out his condo for $40,000, he would owe $5400 in back taxes, would get socked with a penalty of $1350 (25% is the amount levied, I believe, at the rate of 5% per month), and 6% interest is another $324.  That's $1674 in penalties and interest, which should be more than enough to cover the time and expense it takes to file a lien.  Now, of course, if non compliance is not anywhere near 5%, it would get more expensive for the state.   The point is, if there is even a small fraction of property owners not paying taxes, the cost of enforcement under current law would easily be covered by penalties and interest.  Now, of course, if there is hardly any non-compliance,.,,   Well, we wouldn't want to facts to influence our opinion!

  • jwe Contributor 284 posts since
    Feb 18, 2012
    Currently Being Moderated
    721. Mar 11, 2012 11:24 AM (in response to cruisin9)
    Re: Hawaii Trying to Kill VRBO

    My reply to Sen Baker:

    Senator Baker,

     

    Mahalo for your email.

     

    I am extremely disappointed that you apparently do not  understand:

     

    1. The significant economic damage that this bill will inflict  on property owners from lower revenue and higher expenses

     

    2. The LOSS of TAT to the State.

     

    I say this because of my personal experience.  Aston operate  the rental pool in our condo complex and we have considered using them on  several occasions.   In each case we found out that they produce significantly  less revenue for the equivalent units (due to lower occupancy and lower room rates).   This is hard data, which you can easily verify, not like the unsubstantiated  "data" that has been presented by supporters.  Other owners have come to similar  conclusions.

     

    3. The strong  belief of property owners that this is onerous  and unfair and their commitment to oppose this bill and challenge it in the  courts if necessary.

     

    Best regards
  • info@waipoulicondo.com New Member 20 posts since
    Feb 21, 2012
    Currently Being Moderated
    722. Mar 11, 2012 11:21 AM (in response to mauicondoowner)
    Re: Hawaii Trying to Kill VRBO

    @mauicondoowner - i see where you're coming from and agree there are plenty of ways to enforce tax complience and benefit greatly from it. With vrbo listings it may not be as simple though as there is no proof of owner collecting any money (or the exact amount) in the past and even for the future which is irrelevant as far as tax concerned. Either way it's not my job to figure out how they enforce their laws and i am ok with any as long as those laws are constitutional and sane. and SB2089 it is not!

  • New Member 3 posts since
    Feb 28, 2012
    Currently Being Moderated
    723. Mar 11, 2012 12:07 PM (in response to crazyknits)
    Re: Hawaii Trying to Kill VRBO

    Blackburied, thank you for thoughtful analysis.  Crazy, thank you for the effort of talking to the senators.  How can these lawmakers deceive themselves so fully as to believe SB 2089 will benefit tourism or the people of HI? 

     

     

     

    I have asked a federal lawyer who is a constitution devotee to look at this.  He immediately recognized the commerce clause issue, seemed interested and promised to give it a look.

     

     

     

    Hope to have more opinions for you.

    Attachments:
  • Contributor 175 posts since
    Feb 22, 2012
    Currently Being Moderated
    724. Mar 11, 2012 12:36 PM (in response to mauicondoowner)
    Re: Hawaii Trying to Kill VRBO

    mauicondoowner wrote:

     

    There is a tax clearance form in existence already.  It is a fairly simple

    form to be filled out, but the state will be deluged with thousands of

    these forms, and my understanding is this must be done annually. Of course,

    it won't cost the state any extra money to handle all this extra paper

    work.  LOL.

    The only form I can find is A-4:

     

    http://puc.hawaii.gov/industries/Transportation/motor-carrier-forms/tax_clearance_application_form

     

    Is this what we think they mean by "federal tax form 990"?

    mauicondoowner wrote:

     

    [...]

    (Example--The city of Madison, Wisconsin passed an ordinance that said any

    milk sold in the city had to be bottled within five miles of the city

    limit.  The city said this was necessry for health inspectors to assure the

    quality of the milk.  The Supreme Court ruled against the city, saying

    there were other ways that could be assured.)  An injunction against

    implementation of this bill would be sought immediately, and the state, in

    my estimation at least, would waste all of its money on fighting this in

    court.  It just won't fly.

    That's so strange: I was thinking when writing that maybe you could make an out-of-county law concerning milk, as it would not be as fresh if brought from out-of-county... but, as you show, even that would get thrown out.  It's hard to understand why the AG doesn't tell the representatives that anything like this won't stand up in court.

  • Contributor 175 posts since
    Feb 22, 2012
    Currently Being Moderated
    725. Mar 11, 2012 12:33 PM (in response to crazyknits)
    Re: Hawaii Trying to Kill VRBO

    crazyknits wrote:

     

    Thank you for this well thought out analysis. As I live within commuting distance of Washington, DC, I have decided to schedule an actual sit down with both my senator and the senator from Hawaii. ...

    Watch the state capitol's web site closely... this, and related bills (HB1706, HB1707, HB2078, SB2089) get radically changed as they go through committees.  We've seen the "Property Manager" requirements come and go, and could see them back again.  I've even heard that what was passed on the senate floor was radically different from what we see as SB2089 SD1 (in our favor), but I haven't see evidence of that on the state's web site.

  • New Member 20 posts since
    Mar 5, 2012
    Currently Being Moderated
    726. Mar 11, 2012 1:50 PM (in response to cruisin9)
    Re: Hawaii Trying to Kill VRBO

    This is a link to the Department of Tax website for News Releases.

    http://www6.hawaii.gov/tax/a2_1media.htm

     

    If you have time and want to review some information there are news releases for tax violators, what their willful tax evasion was, the amounts paid beyond restitution (the repayment of taxes owed) and the penalties and fines imposed.  Bear in mind this is willful, not an uneducated nonresident who doesn't know they aren't following the law.

     

    This is a very interesting study of how Hawaii deals with resident non tax compliance.  For instance, some are for not paying or filing tax statements for 5 years.  They were to pay restitution (the tax owed) the fine and probation.  The fine wouldn't add up to a year or two of having to pay a realtor!  If you read SB2089 SD1 it slaps a fine on everyone at every point in the process.  This is not consistent with tax compliance for residents as shown by these news releases.

     

    One would think the tax department posts the news release of tax violators as a public deterrent to show that there are consequences for not paying taxes.  If you read each of these, you will overwhelming come to the conclusion, even when a Judge sentences residents for non compliance it is much less punitive than SB2089 SD1.

     

    Also read the December 15th news release regarding "Call for Investigation"  It says there were internal security breaches in the Department's computer tax database going back as far as 2008 and the people (employees) have been put on administrative leave pending the investigation by the Attorney Generals office.  That doesn't give me much confidence in the confidentiality of my information.

     

    I am afraid the Tourism Committee who will hear SB2089 SD1 tomorrow, will pass it.  As you probably noticed, Representative Evans is on this Committeee and she is the one who introduced its twin Bill 1707 so I would think she will give this Bill her full support.

  • New Member 22 posts since
    Feb 25, 2012
    Currently Being Moderated
    727. Mar 11, 2012 3:26 PM (in response to worried)
    Re: Hawaii Trying to Kill VRBO

    Hi, all:

     

    A couple of things now that testimony has closed.

     

    This is a difficult time for all of us.  I will say that the frightening thing, to me, was the response of Americans to this Hawaii development.  Put simply, if Americans are in a state of disbelief that this could happen, rest assured that the impact on me has been magnified, ten-fold.  If Americans are rocked that this is happening, please know that it is very, very unsettling to at least this Canadian.  I thought that some of the fundamentals in this matter were as close to being written in stone as was possible.  My rock might be NAFTA and yours might be the Constitution, but in both, the principles are the same:  Deals are deals, rights are rights, and commitments are commitments, and protections are protections.  They must all be upheld when individuals get weak, or it all falls down.

     

    That said, this is the legislative branch.  Many of you have wisely pointed to the judicial branch as being likely to provide clarification on these legislative forays that uphold these fundamentals.  A long time ago, I earned my Master’s in Intergovernmental Management from USC.  I believed then, and still do now, that the system works.  But the lifting was never supposed to be easy, and was going to get harder.  Right now, the Hawaii State Legislature is doing an easy lift; and we all have it within our keyboards to meet and match.

     

    And, let me say this. When news of these bills first hit me, I was, well, embarrassed.  I’m over it now, no worries about that, but there you go, I was embarrassed.  Four years ago, I was very worried that market uncertainty would wipe out my savings and my retirement.  I wanted to be more in control.  So I sold out of the market, and bought property in Hawaii, and vowed I would manage it myself.  Turns out I’m good at it, and it is an absolute blast helping people choose Hawaii and have the holiday they’ve dreamed of.   When all this started, all these bills, I was embarrassed.  I said to my wife, “I’ve been a fool.  I have less control, and it’s all at greater risk than it ever was before, even the Americans are saying the same.  And I picked the US because I thought it was safer than other places.”  I was embarrassed that people who knew me, and who knew of this Hawaii matter would say, “Serves you right.  Better never to take a chance.”

     

    Maybe you were different.  But if there is the slightest twinge of embarrassment or feeling that you might think people’s reaction will be, “People with second homes having a bad day?  I should be so lucky,” it’s OK to think it, but get over it.  The issues being raised on this forum are core issues to everyone:  Deals are deals, rights are rights, and commitments are commitments, and protections are protections.  They must be upheld when individuals get weak, or it all falls down.

     

    And that reminded me of something that may be helpful as we gird our loins for the next steps.  They were first proposed by Elsabeth Kubler-Ross in her 1969 book, when she wrote of the stages of loss and grief.  I borrow them, inappropriately of course given their original purpose, because they seem quite relevant to our efforts, and refer you to “The 5 Stages of Loss and Grief by Julie Axelrod at psychcentral.com.

     

    1. Denial and Isolation:  Deny the reality of the situation. Block out the words and hide from the facts.

     

    2. Anger:  As the facts get harder to ignore, denial is less of a refuge, and feelings are redirected and expressed as anger.

     

    3. Bargaining:  The reaction to vulnerability is to try to regain control, i.e., if only we had done this, or not done that.

     

    4.  Depression:  In one form, a practical reaction to a loss, i.e., what will this cost?; how will I ever comply with what’s required?  This can be eased by clarification and reassurance.  In a second form, flowing from the end of something.  Saying goodbye to what was, which can sometimes be rectified by knowing you’re not dealing with it entirely on your own.  (I note, here, that the journal from which this has been borrowed, it notes that, in respect of the second form, “Sometimes all we really need is a hug.” So perhaps we can consider this forum a digital version of that.)

     

    5. Acceptance:  In which we make peace, and a time marked by withdrawal and calm.

     

    These past weeks have been hard ones.  Assumed core values, beliefs, rights, and protections, have been challenged.  This legislative juggernaut has pre-occupied us, and discouraged us.  Hard to believe it is happening, but it is.  So I think it important, here, to quote directly from the article: 

     

    “Coping with loss is a ultimately a deeply personal and singular experience — nobody can help you go through it more easily or understand all the emotions that you’re going through. But others can be there for you and help comfort you through this process. The best thing you can do is to allow yourself to feel the grief as it comes over you. Resisting it only will prolong the natural process of healing.”

     

    I provide the above, because of its applicability, I believe, to what all of us have or are going through.  I make a careful clarification, though, that I am not suggesting that in anyway it’s over, that we’ve lost.  What I am saying is that we should all move to the “Acceptance” part as quickly as we can, because there is more work to do.

     

    First of all, in respect to Stage 4: Depression and it being eased by clarification and facts: I wrote a nice and admittedly for me, remarkably, actually, short note to the Hawaii Department of Taxation, asking specifically for the statement of "annual tax clearance" as referenced in the bill.

     

    I was very quickly provided with a reference to Form A-6, with the direction that “anyone can ask for a tax clearance on form A-6, even if it is not yet required.” Now oddly, when I try to insert the link here, and use it, it pulls up an awful mess.  So try entering this in your search engine, as I did, to make the interactive form appear: “hawaii taxation form A-6.”  I’m meeting with our accountant on Monday to see if this is a form we can use.

     

    Second, think about those five stages of grief, or loss — they could apply equally in loss due to death (their original application), loss of property, protection or equal treatment rights, or even loss of face for advancing something that is fundamentally flawed.  Think about what’s at stake, and about those who might be backing what they think is the right horse, but are always alive to the shame or embarrassment of being corrected or rebuked, especially on the fundamentals by others beyond their turf or patch.  I say this in respect of JWE’s post two-or-so pages ago about Senator Baker’s response:

     

    “Mahalo for your e-mail, but with all due respect, we disagree with your analysis. A resident of Hawaii may be considered a non-resident for purposes of this bill.  And the NAFTA thread is quite a stretch.  This bill has nothing to do with stifling trade. 

Regards,
senator Rosalyn H. Baker

Chair, Senate Committee on Commerce and Consumer Protection
5th District -- South and West Maui.”

     

    Hands up all those who wonder if this isn’t an example of Stage 1:  Denial and Isolation?

     

    I raise this point because of something we talked on the forum some days ago about national and international bracketing, i.e., drawing others to the Constitution or NAFTA angle in order that they might ‘have a word’ with Hawaii State Legislators or others to ensure that actions of the Legislature, in advancing Hawaii Policy objectives, might do so while upholding the provisions and protections of both.

     

    So to BHA, Gvkent, Blackburied, and Crazyknits, you are right about reaching out to officials in other states, at other levels of government, and everyone should take the close of the testimony phase as a chance to draw others into this matter. Because whether they’re Canadian or American, they all have a dog in this fight.  It’s time to help members of the Hawaii State Legislature move through the five stages to the point where they’re able to accept that whatever their policy ideals and goals, the road they are travelling to get there is less-travelled for a reason: because we Canadians and Americans stand for more. We stand for better.  And together, in a very uncertain world, we stand taller because of it.

     

    Since we talked about national and international efforts to bracket the Hawaii State Legislature with I have sent my admittedly long letter to those I felt might weigh in, one way or another, in a manner appropriate to their opportunities and limitations in “having a word” with those whose actions will upset the applecart (fax numbers in parenthesis).

     

    • The Hon. John Baird, MP, Minister of Foreign Affairs, Ottawa, Canada (613-996-9880)
    • The Hon. Ed Fast, Minister of International Trade, Ottawa, Canada (613-996-9795)
    • The Hon. Diane Ablonczy, MP, Minister of State of Foreign Affairs, Ottawa, Canada (613-992-2537)
    • Ambassador Ron Kirk, U.S. Trade Representative, Washington, DC (202-395-4549)
    • The Hon. Max Baucus, Chairman, Senate Committee on Finance, Washington, DC (202-228-0554)
    • The Hon. Orrin G. Hatch, Ranking Member, Senate Committee on Finance, Washington, DC (202-228-0554)
    • The Hon. Dave Camp, Chairman, House Committee on Ways & Means, Washington, DC (202-225-2610)
    • The Hon. Sander Levin, Ranking Member, House Committee on Ways & Means, Wash., DC (202-225-2610)
    • Sen. Ron Wyden (OR), Chairman, Subctte. Int’l Trade, Customs, and Global Comp., Wash. DC (202-228-2717)
    • Ambassador Gary Doer, Canadian Ambassador to the United States, Washington, DC (202-682-7726)
    • Ambassador David Jacobson, United States Ambassador to Canada, Ottawa, Canada (6130688-3082)
    • Consul General Anne Callaghan, United States Consul General in Vancouver, Canada (604-685-7175)
    • Consul General Cassie Doyle, Consul General of Canada in San Francisco (resp. for Hawaii) (415-834-3189)
    • Perrin Beatty, President and CEO, the Canadian Chamber of Commerce, Ottawa, Canada (613 238-7643)
    • All Members of Parliament from BC and Alberta, Canada (whose constituents, be they American and or Canadian, might own investment property in Hawaii and the other states; I will provide all emails under a later post)
    • All Senators from BC and Alberta, Canada (for the same reason as writing to MPs; all emails to be provided under a later post)

     

    As you will note, some are American, some are Canadian.  All will have an interest in the significance of the Bill 2089 SD1 and others like it.  It might relate to American interests, or it might relate to Canadian interests.  But, man, there are some big interests there, no matter if you’re “Honorable” or “Honourable,” if you get my point.

     

    On the chance that you may be able to make use of this broader reach-out, here, below, are the points I have made in my email cover notes or fax cover notes to these recipients. But please note that not all these points are made to each recipient:  I have tried to tailor the cover notes to what I think might be recipients’ interests (and Canadians, write to the American officials; Americans, please write to the Canadian officials, too):

     

    • There may be Americans residing in Canada (or in other states) who own real estate investments in Hawaii and would be subject to more onerous and costly management and operations than would “residents” of Hawaii.

     

    • As constituents in your ridings affected by this and similar bills may not be aware of them, perhaps you could consider letting them know that they may need to make themselves aware of these developments, and the potential for their spread to other states.  In various forms, this and similar Hawaii bills have offered effective dates of July 1st, 2012, and stiff penalties for non-compliance by non-residents, in some cases $1,000 a day.

     

    • This and other Hawaii State Legislature bills 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 and NAFTA (Chapter 11 [1102]: National Treatment): 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?

     

    • Please consider using your ability to connect with those with expertise and credibility on NAFTA — and the protections afforded to individual Canadian investors — in order that they might share this expertise with the Hawaii State Legislature so they can achieve their policy objectives while upholding the provisions and protections of NAFTA.  It may be entirely possible that a few words of clarity to Hawaii State legislators from those in their country or in Canada possessing a strong appreciation of the provisions and protections of NAFTA may assist their deliberations.

     

     

    Now, having provided these points, please feel free to cut, paste, modify or otherwise use them for any good purpose to assist in ensuring that the Hawaii’s legislative efforts achieve policy objectives and uphold the provisions and protections of the great and the important, like the United States Constitution, NAFTA, and the lesser and too-often overlooked, decency and fair-play.

     

    So, summing up?  Fortunately, all or most of us, have gone through the five stages.  Everyone needs to get through the fifth stage, fast. But right now, we’re ahead.  The Hawaii State Legislature is still denying what all know to be true, provided we let as many other officials outside in the rest of the US and in Canada know about the matter.  And because we’re through the five stages, we can focus clearly on next steps and bring them into play.

     

    So, tomorrow, I’ll email to the rest of Canada’s Senators and MPs, some 250 or so.

     

    Other Canadians should join in.  Americans have been provided a great lead by BHA, Gvkent, Blackburied, and Crazyknits, and should take the material to other State legislatures, Congress, the folks I’ve listed above, and their local, regional, state, and national media.

     

    So folks, we’ve just had, I hope, a digital hug (Phase 4, Depression).  Start cutting, pasting, writing, emailing and faxing.  Get this matter off the Islands.

     

    Common sense has been waiting its turn to go viral.  Make it so.

     

    Adam

     

     

     

    Adam Leamy

    Victoria, BC

     


     

    March 8th, 2012

     

    Members of the House and Senate

    Hawaii State Legislature

    State Capitol

    415 South Beretania Street

    Honolulu, HI 96813

     

    Dear Members of the House and Senate of the Hawaii State Legislature:

     

    My name is Adam Leamy.  I am a Canadian citizen, residing in Victoria, British Columbia, Canada.  I am writing in respect of the North American Free Trade Agreement (NAFTA) and Senate Bill 2089 SD1 (and recent Hawaii State Legislature bills similar to it).

     

    My interest in this bill, and recent bills like it, stems from my ownership of two properties on Maui; units 203 (purchased in 2008) and 208 (purchased in 2011) in Hale Kai O’ Kihei.  This is a 59-unit building located at 1310 Uluniu Road in Kihei, 96753, and is supported by a full-time, live-in Resident Manager.  Both our apartments are cared for and attended to by Tips Maui, Inc., owned and operated by Mr. Ed Galvez, of Maui, Hawaii.  My Hawaii Tax Identification Number is W87097056-01. My Internal Revenue Service Tax Identification Number is 98-0607258.

     

    I am not alone in investing in United States real estate in order to establish and conduct enterprise there.  I expect that there are many thousands of Canadians who have made and operate similar investments in Hawaii, Florida, California, the New England states and all other states and regions of the Unites States, providing legal guest accommodation in all manner of housing types and locations.  In the same vein, there are likely many thousands of Americans who have invested in vacation and second properties in the provinces and regions of Canada, and through responsible management decisions, make them available to tourists visiting those locations.

     

    It would seem to me that if individual citizens of Canada and the United States made such investments, and then found that state or provincial action applied greater operational standards and additional costs to them than it did to ‘resident’ investors engaged in the same enterprise, NAFTA would be discredited within both countries at its basic level:  individual citizens who sought to pursue cross-border investment and enterprise through its provisions, only to see themselves the focus of targeted operational requirements and costs after the investments had been made.  It also seems likely that such individuals, encouraged by their governments to embrace NAFTA and seek opportunities under its provisions, would quickly turn to these same governments for action and resources to offset the additional costs imposed on them because of such governments’ encouragement to embrace NAFTA, and the failure of the cross-border state or province to honour its provisions and protections.

     

    It also seems to me that in these uncertain economic times, it is better to head off such problems so that people can focus their energies on making investments and creating and operating enterprise.  This does not seem to be a good time for any of us to be distracted from the fundamentals our business investments and our operation of them.

     

    And that is why in writing to you I am also writing to others, by email or by fax as appropriate, to seek their efforts in providing helpful input to Hawaii State Legislature on bill SB2089 SD1.  It is my hope that they may be able to assist in ensuring SB2089 SD1 and bills similar to it achieve State of Hawaii objectives while honouring and upholding the provisions and promise of NAFTA, as committed to by the United States, Mexico, and Canada.  These individuals are:

     

    • The Hon. John Baird, MP, Minister of Foreign Affairs, Ottawa, Canada
    • The Hon. Ed Fast, Minister of International Trade, Ottawa, Canada
    • The Hon. Diane Ablonczy, MP, Minister of State of Foreign Affairs, Ottawa, Canada
    • Ambassador Ron Kirk, U.S. Trade Representative
, Washington, DC
    • The Hon. Max Baucus, Chairman, Senate Committee on Finance, Washington, DC
    • The Hon. Orrin G. Hatch, Ranking Member, Senate Committee on Finance, Washington, DC
    • The Hon. Dave Camp, Chairman, House Committee on Ways & Means, Washington, DC
    • The Hon. Sander Levin, Ranking Member, House Committee on Ways & Means, Wash., DC
    • Sen. Ron Wyden (OR), Chairman, Subctte. Int’l Trade, Customs, and Global Comp., Wash. 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 (resp. for Hawaii)
    • 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 State Legislature webpage, “Nonresident Owner” is defined as follows:

     

    [A]n 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, the 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 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 governments, 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 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

     

     

     

    Adam Leamy

    773 Island Road

    Victoria, BC    V8S 2T8

    Canada

     

     


  • Contributor 49 posts since
    Feb 21, 2012
    Currently Being Moderated
    728. Mar 11, 2012 3:56 PM (in response to ajl)
    Re: Hawaii Trying to Kill VRBO

    Thank you for re printing your previous email. I want to take this to Washington DC for my face to face meeting but hadn’t retrieved it from the volumes of email. You letter was so well done. I will try my best to do it the justice it deserves. I think I will make a day or two in DC to visit most of those on your list. Thank you for the list. I think I am stuck in anger and my embarrassment is directed to the legislators who have so deeply harmed their constituents. How can they be this stupid???? It does not speak well for the Hawaiian populace that they would allow their legislators to put the state at risk for the soon to come legal battle. Hawaii joined the union, Hawaii is represented by a star on the flag and with that comes responsibilities and we the people will hold their feet to the fire, trust me. I hope the Hawaiian legislators read this, I’m done emailing them, I’m off to DC. They will hear from me in another way.

  • New Member 10 posts since
    Feb 22, 2012
    Currently Being Moderated
    729. Mar 11, 2012 4:19 PM (in response to ajl)
    Re: Hawaii Trying to Kill VRBO

    Very good post, thank you.

    I am repeating myself, but I'll say it again, if this bill passes, the take home lesson will be never buy real estate in Hawaii again, or you, as an out of stater, will be harrassed. The message is, come here as a tourist, spend your money, and bug off.

    gvk

     

    Message was edited by: gvkent

  • jwe Contributor 284 posts since
    Feb 18, 2012
    Currently Being Moderated
    730. Mar 11, 2012 8:09 PM (in response to ajl)
    Re: Hawaii Trying to Kill VRBO

    Keep the faith.

    America will not let you down.

    But we may have a long battle to retain our property rights and the right of free choice.

    A long time college friend who is a third generation Hawaiian refers to HI as the Peoples Republic of Hawaii.  Now I understand why

     

      

Regards,
senator Rosalyn H. Baker

Chair, Senate Committee on Commerce and Consumer Protection
5th District -- South and West Maui.”

     

    Hands up all those who wonder if this isn’t an example of Stage 1:  Denial and Isolation?

     

    I raise this point because of something we talked on the forum some days ago about national and international bracketing, i.e., drawing others to the Constitution or NAFTA angle in order that they might ‘have a word’ with Hawaii State Legislators or others to ensure that actions of the Legislature, in advancing Hawaii Policy objectives, might do so while upholding the provisions and protections of both.

     

    So to BHA, Gvkent, Blackburied, and Crazyknits, you are right about reaching out to officials in other states, at other levels of government, and everyone should take the close of the testimony phase as a chance to draw others into this matter. Because whether they’re Canadian or American, they all have a dog in this fight.  It’s time to help members of the Hawaii State Legislature move through the five stages to the point where they’re able to accept that whatever their policy ideals and goals, the road they are travelling to get there is less-travelled for a reason: because we Canadians and Americans stand for more. We stand for better.  And together, in a very uncertain world, we stand taller because of it.

     

    Since we talked about national and international efforts to bracket the Hawaii State Legislature with I have sent my admittedly long letter to those I felt might weigh in, one way or another, in a manner appropriate to their opportunities and limitations in “having a word” with those whose actions will upset the applecart (fax numbers in parenthesis).

     

    *     The Hon. John Baird, MP, Minister of Foreign Affairs, Ottawa, Canada (613-996-9880)

     

    *     The Hon. Ed Fast, Minister of International Trade, Ottawa, Canada (613-996-9795)

     

    *     The Hon. Diane Ablonczy, MP, Minister of State of Foreign Affairs, Ottawa, Canada (613-992-2537)

     

    *     Ambassador Ron Kirk, U.S. Trade Representative, Washington, DC (202-395-4549)

     

    *     The Hon. Max Baucus, Chairman, Senate Committee on Finance, Washington, DC (202-228-0554)

     

    *     The Hon. Orrin G. Hatch, Ranking Member, Senate Committee on Finance, Washington, DC (202-228-0554)

     

    *     The Hon. Dave Camp, Chairman, House Committee on Ways & Means, Washington, DC (202-225-2610)

     

    *     The Hon. Sander Levin, Ranking Member, House Committee on Ways & Means, Wash., DC (202-225-2610)

     

    *     Sen. Ron Wyden (OR), Chairman, Subctte. Int’l Trade, Customs, and Global Comp., Wash. DC (202-228-2717)

     

    *     Ambassador Gary Doer, Canadian Ambassador to the United States, Washington, DC (202-682-7726)

     

    *     Ambassador David Jacobson, United States Ambassador to Canada, Ottawa, Canada (6130688-3082)

     

    *     Consul General Anne Callaghan, United States Consul General in Vancouver, Canada (604-685-7175)

     

    *     Consul General Cassie Doyle, Consul General of Canada in San Francisco (resp. for Hawaii) (415-834-3189)

     

    *     Perrin Beatty, President and CEO, the Canadian Chamber of Commerce, Ottawa, Canada (613 238-7643)

     

    *     All Members of Parliament from BC and Alberta, Canada (whose constituents, be they American and or Canadian, might own investment property in Hawaii and the other states; I will provide all emails under a later post)

     

    *     All Senators from BC and Alberta, Canada (for the same reason as writing to MPs; all emails to be provided under a later post)

     

    As you will note, some are American, some are Canadian.  All will have an interest in the significance of the Bill 2089 SD1 and others like it.  It might relate to American interests, or it might relate to Canadian interests.  But, man, there are some big interests there, no matter if you’re “Honorable” or “Honourable,” if you get my point.

     

    On the chance that you may be able to make use of this broader reach-out, here, below, are the points I have made in my email cover notes or fax cover notes to these recipients. But please note that not all these points are made to each recipient:  I have tried to tailor the cover notes to what I think might be recipients’ interests (and Canadians, write to the American officials; Americans, please write to the Canadian officials, too):

     

    *     There may be Americans residing in Canada (or in other states) who own real estate investments in Hawaii and would be subject to more onerous and costly management and operations than would “residents” of Hawaii.

     

    *     As constituents in your ridings affected by this and similar bills may not be aware of them, perhaps you could consider letting them know that they may need to make themselves aware of these developments, and the potential for their spread to other states.  In various forms, this and similar Hawaii bills have offered effective dates of July 1st, 2012, and stiff penalties for non-compliance by non-residents, in some cases $1,000 a day.

     

    *     This and other Hawaii State Legislature bills 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 and NAFTA (Chapter 11 Re: Hawaii Trying to Kill VRBO: National Treatment): 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?

     

    *     Please consider using your ability to connect with those with expertise and credibility on NAFTA — and the protections afforded to individual Canadian investors — in order that they might share this expertise with the Hawaii State Legislature so they can achieve their policy objectives while upholding the provisions and protections of NAFTA.  It may be entirely possible that a few words of clarity to Hawaii State legislators from those in their country or in Canada possessing a strong appreciation of the provisions and protections of NAFTA may assist their deliberations.

     

    Now, having provided these points, please feel free to cut, paste, modify or otherwise use them for any good purpose to assist in ensuring that the Hawaii’s legislative efforts achieve policy objectives and uphold the provisions and protections of the great and the important, like the United States Constitution, NAFTA, and the lesser and too-often overlooked, decency and fair-play.

     

    So, summing up?  Fortunately, all or most of us, have gone through the five stages.  Everyone needs to get through the fifth stage, fast. But right now, we’re ahead.  The Hawaii State Legislature is still denying what all know to be true, provided we let as many other officials outside in the rest of the US and in Canada know about the matter.  And because we’re through the five stages, we can focus clearly on next steps and bring them into play.

     

    So, tomorrow, I’ll email to the rest of Canada’s Senators and MPs, some 250 or so.

     

    Other Canadians should join in.  Americans have been provided a great lead by BHA, Gvkent, Blackburied, and Crazyknits, and should take the material to other State legislatures, Congress, the folks I’ve listed above, and their local, regional, state, and national media.

     

    So folks, we’ve just had, I hope, a digital hug (Phase 4, Depression).  Start cutting, pasting, writing, emailing and faxing.  Get this matter off the Islands.

     

    Common sense has been waiting its turn to go viral.  Make it so.

     

    Adam

     

    Adam Leamy

     

    Victoria, BC

     

     

     

     

    March 8th, 2012

     

    Members of the House and Senate

     

    Hawaii State Legislature

     

    State Capitol

     

    415 South Beretania Street

     

    Honolulu, HI 96813

     

    Dear Members of the House and Senate of the Hawaii State Legislature:

     

    My name is Adam Leamy.  I am a Canadian citizen, residing in Victoria, British Columbia, Canada.  I am writing in respect of the North American Free Trade Agreement (NAFTA) and Senate Bill 2089 SD1 (and recent Hawaii State Legislature bills similar to it).

     

    My interest in this bill, and recent bills like it, stems from my ownership of two properties on Maui; units 203 (purchased in 2008) and 208 (purchased in 2011) in Hale Kai O’ Kihei.  This is a 59-unit building located at 1310 Uluniu Road in Kihei, 96753, and is supported by a full-time, live-in Resident Manager.  Both our apartments are cared for and attended to by Tips Maui, Inc., owned and operated by Mr. Ed Galvez, of Maui, Hawaii.  My Hawaii Tax Identification Number is W87097056-01. My Internal Revenue Service Tax Identification Number is 98-0607258.

     

    I am not alone in investing in United States real estate in order to establish and conduct enterprise there.  I expect that there are many thousands of Canadians who have made and operate similar investments in Hawaii, Florida, California, the New England states and all other states and regions of the Unites States, providing legal guest accommodation in all manner of housing types and locations.  In the same vein, there are likely many thousands of Americans who have invested in vacation and second properties in the provinces and regions of Canada, and through responsible management decisions, make them available to tourists visiting those locations.

     

    It would seem to me that if individual citizens of Canada and the United States made such investments, and then found that state or provincial action applied greater operational standards and additional costs to them than it did to ‘resident’ investors engaged in the same enterprise, NAFTA would be discredited within both countries at its basic level:  individual citizens who sought to pursue cross-border investment and enterprise through its provisions, only to see themselves the focus of targeted operational requirements and costs after the investments had been made.  It also seems likely that such individuals, encouraged by their governments to embrace NAFTA and seek opportunities under its provisions, would quickly turn to these same governments for action and resources to offset the additional costs imposed on them because of such governments’ encouragement to embrace NAFTA, and the failure of the cross-border state or province to honour its provisions and protections.

     

    It also seems to me that in these uncertain economic times, it is better to head off such problems so that people can focus their energies on making investments and creating and operating enterprise.  This does not seem to be a good time for any of us to be distracted from the fundamentals our business investments and our operation of them.

     

    And that is why in writing to you I am also writing to others, by email or by fax as appropriate, to seek their efforts in providing helpful input to Hawaii State Legislature on bill SB2089 SD1.  It is my hope that they may be able to assist in ensuring SB2089 SD1 and bills similar to it achieve State of Hawaii objectives while honouring and upholding the provisions and promise of NAFTA, as committed to by the United States, Mexico, and Canada.  These individuals are:

     

    *     The Hon. John Baird, MP, Minister of Foreign Affairs, Ottawa, Canada

     

    *     The Hon. Ed Fast, Minister of International Trade, Ottawa, Canada

     

    *     The Hon. Diane Ablonczy, MP, Minister of State of Foreign Affairs, Ottawa, Canada

     

    *     Ambassador Ron Kirk, U.S. Trade Representative
, Washington, DC

     

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

     

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

     

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

     

    *     The Hon. Sander Levin, Ranking Member, House Committee on Ways & Means, Wash., DC

     

    *     Sen. Ron Wyden (OR), Chairman, Subctte. Int’l Trade, Customs, and Global Comp., Wash. 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 (resp. for Hawaii)

     

    *     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 State 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, the 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 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 governments, 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 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

     

    Adam Leamy

     

    773 Island Road

     

    Victoria, BC    V8S 2T8

     

    Canada

     

     

     

     

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  • sodamo Contributor 260 posts since
    Nov 5, 2011
    Currently Being Moderated
    731. Mar 12, 2012 6:20 PM (in response to cruisin9)
    Re: Hawaii Trying to Kill VRBO

    Good news ??

     

    SB2089

     

    3/12/2012HThe committee(s) on TOU recommend(s) that the measure be deferred.
  • New Member 20 posts since
    Mar 5, 2012
    Currently Being Moderated
    732. Mar 12, 2012 6:21 PM (in response to cruisin9)
    Re: Hawaii Trying to Kill VRBO

    Folks:

     

    The Tourism Committee hearing the Bill this morning has voted to "defer" !!!!!!!!!!!!!!!!!!!!!

     

     

    Good news -- Look at the Hawaii gov. bill status page.

     

    Awesome .....................................................................

     

    Do you think they didn't want Canada calling regarding NAFTA -- do you think they didn't want congress representatives calling from Washington  -- was it that the Hawaii Board of Realtors said they didn't sponsor it -- that  it was only a few realtors, was it that the Hawaii Tourism Authority never supported it???   Whatever they reason -- this is looking a whole lot better for us.

  • jwe Contributor 284 posts since
    Feb 18, 2012
    Currently Being Moderated
    733. Mar 12, 2012 6:27 PM (in response to worried)
    Re: Hawaii Trying to Kill VRBO

    It shows the power of team work and standing together.

    We now need to worry about HB 1706.

    We also need to organize ourselves so that we NEVER get blindsided again or

    endure such such an attack on our property rights.

  • New Member 20 posts since
    Mar 5, 2012
    Currently Being Moderated
    734. Mar 12, 2012 6:30 PM (in response to jwe)
    Re: Hawaii Trying to Kill VRBO

    I agree 100%

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