To the residents of Kauai,
As I look at my new tax bill and then to the March 28 article about TVRs in The Garden Island, I am amazed.
The County Council and departments running our bloated bureaucracy seem to have no problem forcing all homeowners to pay higher and higher property taxes unnecessarily. There is a simpler and fairer solution for the county to obtain the money it needs. Allow any property owner in the County of Kauai to operate as a registered vacation rental or bed and breakfast. Why? Some simple math. I estimate that the average TVR takes in $1,500 a week. That amounts to $72,000 a year. There are probably at least 1,000 unlicensed TVRs. That results in $72 million a year in taxable income. Yes, $72 million!
This means that 14 percent TVR tax not being paid now is over $10 million in revenue. Yes, $10 million! Plus another $1.5 million for initial application fees, plus another $750,000 annually in renewal fees. Additionally, this does not include the increase in Kauai property taxes that vacation rentals and B&B owners would have to pay as a registered TVR because they are taxed at a much higher property tax rate than the rest of us.
Hard to estimate, but I would guess that would bring in another $4 million annually. Yes, scratch your head at this point, a low estimate of $14-plus million dollars in annual revenue to the county and a one time $1.5 million dollars to help with staffing for all the new TVR applications. Could the county lower our property tax rates back to, let’s say, 2000 levels with that much money? That would be great!
But wait, one more thing that should be considered by all of us: This act by the county in shutting down, rather than including, the unlicensed TVRs will result in a crippling loss of $72 million to the economy annually. What, what, what?!? Yes, 72 million dollars in lost revenue as visitors go to other islands where there are accommodations. Who will get hit the worst by this loss? I would imagine a shift or two at Costco, Walmart, Home Depot, and Kmart, not so bad unless you are the one being laid off. A lot of maids will be out of work, as well as landscapers and handymen, grocers, cooks, bartenders, tour guides, helicopter pilots … oh yeah, everything and everyone will be affected. Now the county will have less in sales tax and payroll revenue and what do they do when that happens? Well, we all know what they do. They our raise property taxes!
Kauai should have a level playing field for all property owners on the island. It’s not fair that a neighbor to the right can rent legally and the neighbor to the left cannot. He rents “illegally,” relies on this income to be able to live and is too scared to pay taxes for fear of being caught. Doesn’t make sense, fair is fair. We can either all rent TVR if we want to or none of us should be able to, no matter where on Kauai we live. Yes, that would be the best. It is not American, not Christian, and not fair that one person can rent and the guy next door cannot because of some arbitrary date or a line on a map. If the majority of the island wants less visitors, then so be it. We can all quadruple what we pay in property taxes to live here in paradise on our own.
While we debate the merits of the county’s new actions, what we should keep in mind is how much all of our property taxes are escalating. Kauai is quickly becoming an island where only the extremely wealthy can afford to own property (See The Garden Island, March 29 “Hanalei — land of million dollar homes”). Maybe that is the long-term county plan.
Instead, let the visitors, vacation rental, hotel, B&B, and homestay TVR taxes add to the county funds. We spend money promoting tourism to Kauai all over the world. Studies have shown many visitors prefer to stay in vacation rentals and B&Bs away from crowds to experience “real” island life.
In conclusion, as I have shown, this medieval witch hunt of illegal TVRs will result in the loss of jobs, the loss of revenue and lead to an increase in property taxes for us all. It is insane.
Think about it.
Pono Lokahi is a resident of Poipu.