LIHU‘E — The County of Kaua‘i recently implemented a few changes to the island’s real property tax system, more than doubling tax relief for some homeowners. A bill to be introduced today by County Councilman Tim Bynum would further expand
LIHU‘E — The County of Kaua‘i recently implemented a few changes to the island’s real property tax system, more than doubling tax relief for some homeowners. A bill to be introduced today by County Councilman Tim Bynum would further expand homeowners’ exemptions.
But do real property tax exemptions have a future on Kaua‘i? A recent study commissioned by the City and County of Honolulu has advised the elimination of those tax exemptions. One of the members of the Honolulu Real Property Tax Advisory Commission that recommended eliminating the exemptions was on Kaua‘i earlier this month to explain the finding.
Tax Commission member Lowell Kalapa, who also is president of the Tax Foundation of Hawai‘i, presented a series of proposals to the Kaua‘i Cost Control Commission on Jan. 9. Kalapa said the county’s real property tax exemption program is discriminatory and should be eliminated.
“For Kaua‘i we are talking about 7,000 basic home exemptions and another 4,200 multiple home exemptions,” Kalapa said.
He suggested a tax capped at 3 percent of the homeowner’s income. Kalapa said a cap would be more fair and could provide more benefits than home exemptions.
However, a study by the National Tax Foundation shows a 3 percent cap would hardly mean a tax benefit to Kaua‘i’s homeowners. It would instead allow real property taxes to more than double.
The National Tax Foundation states the average household income on Kaua‘i from 2004 to 2009 was $74,082, and average real property taxes paid by an owner-occupied home on the island was $951, representing an average of 1.28 percent of the household income.
The National Tax Foundation also found the nationwide average of property taxes paid on owner-occupied homes during the same period represented 2.8 percent of nationwide median household income of $64,338.
Kalapa was part of the seven-member commission tasked last year by the City and County of Honolulu to prepare a tax study to be considered by Honolulu’s council members.
The Real Property Tax Advisory Commission delivered the preliminary report Dec. 15.
The Tax Commission’s findings are simply recommendations to the Honolulu Council.
The Kaua‘i Cost Control Commission invited Kalapa to give a presentation on the tax commission’s findings as part of a discussion on real property tax exemptions and rate setting procedures posted for the Jan. 9 meeting.
Ultimately, it is the Kaua‘i County Cost Control Commission’s responsibility to prepare a proposal to the administration to be sent to the Kaua‘i County Council for deliberation.
• Léo Azambuja, staff writer, can be reached at 245-3681 (ext. 252) or lazambuja@ thegardenisland.com.
