LIHUE — The Kauai County Council gave their initial OK to a pair of bills that finance officials say will seek to close disparities in current tax laws. “We need to keep our options open and we need to have
LIHUE — The Kauai County Council gave their initial OK to a pair of bills that finance officials say will seek to close disparities in current tax laws.
“We need to keep our options open and we need to have discussions about tax situations, where the situation has changed, like in the timeshare industry,” Councilman Tim Bynum said.
The seven-member board unanimously approved the two bills on first reading Wednesday and will reconsider them during a public hearing scheduled for their Aug. 13 meeting.
The first bill, Bill 2548, would create a new tax class for timeshare properties, which are currently taxed under the county’s hotel and resort class — a rate that is now set at $10.85 per $1,000 in assessed valuation.
Condominiums, meanwhile, are taxed based on their use as homestead, residential or vacation rental properties.
County Finance Director Steve Hunt said the proposed bill attempts to adjust county tax laws with the changing real estate market.
The second bill, Bill 2549, would create a new tax class called “residential investor,” which will apply to non-owner occupied properties that are valued at $1 million or more.
A preliminary analysis, Hunt said, found that about 687 properties on Kauai may fall under residential investor category.
Some council members, however, say they are wary of the proposal.
“I think we really need to be very careful about assuming that owners of $1 million properties can afford more taxes,” Hooser said. “A million dollars isn’t what it used to be. I know there are a lot of family-owned properties that may just have a shack on it and they don’t want to sell it — it’s a family property — and they don’t necessarily want to make it into a vacation rental.”
Councilwoman JoAnn Yukimura agreed.
“If things start to skyrocket, this tax class at $1 million will start covering a lot of people,” she said. “We need to find a working red line, so to speak.”
Council Chair Jay Furfaro said that a more fair and equitable solution should account for inflationary pressures on the local housing market.
“Property values in the last 18 months have jumped again, and if we have this vehicle that draws the line each year going forward, then that might be a more fair approach,” Furfaro said.
