• Property tax reform Property tax reform A phobia for some long-time residents of Kaua‘i is the annual opening of the county property tax bill. Some might live in a plantation era house on land handed down from their grandparents,
• Property tax reform
Property tax reform
A phobia for some long-time residents of Kaua‘i is the annual opening of the county property tax bill.
Some might live in a plantation era house on land handed down from their grandparents, while living on a fixed income, or perhaps being in the lower middle class tax bracket. On Kaua‘i, that means you’re struggling to make ends meet. Seeing your property tax bill zoom due to the construction of a 3,000 square-foot home down the road is a nightmare many have faced.
Now a county-mandated property tax task force led by Steve Hunt is proposing reform to the current system.
The big change would be in weighing the tax scales in more on the value of buildings, rather than land.
The county’s eight tax levels would be reduced to two, greatly simplifying the system, too, with one for long-time residents and for properties that are rented with long-term leases, and a second catch-all general category.
Condensing property taxes down to two levels would put a focus on homes used as vacation rentals. The conversion of long-term rental homes to vacation rentals n a lucrative move for many homeowners n has been a factor in the creation of a home rental availability crisis on the island.
Overall, the property tax income to the county would stay in at about $45 million per year.
The big question before the council is whether the new system would be fair all the way around. Councilmembers are facing a potential political boost on one hand, and possibly a political fall out on the other. Long-time residents will be happy with this decision, but will newcomers to the island go peacefully along with the scales tilted towards kama‘aina residents?
Hunt told the council this week that the value of agricultural lands would also be “updated.” This could signal a higher tax rate for those who have used ag lands to build large homes that have token farm-type plantings and relatively low property tax bills compared to those who have homes in resort areas and other non-ag areas.
Property tax reform is long overdue on Kaua‘i, and will hopefully result in lower rents for those who are struggling to keep a roof over their heads.
On the state level a similar move should be made to reform our pyramiding excise tax system. Hidden taxes in Hawai‘i make excise taxes in other states look low, while on the surface Hawai‘i looks good when it appears we’re only paying about 4 percent on goods and services. The real cost of excise taxes can be well above 10 percent once the cost of an item is looked at from start to sale. An elimination of excise tax on food and medicine is also needed, as is common in most states. An excise tax holiday on a day before school starts in the summer n with no tax on clothes, computers and other school items n would give local merchants a boost, as well as give families a break when they face school expenses.
