LIHU‘E — A proposal by a Kaua‘i County tax-reform group calls for rich folks to be taxed more for big homes they build or own on the island, and recommends long-time property owners with modest homes pay less in land
LIHU‘E — A proposal by a Kaua‘i County tax-reform group calls for rich folks to be taxed more for big homes they build or own on the island, and recommends long-time property owners with modest homes pay less in land taxes.
Approval of the proposal by the Kaua‘i County Council through an ordinance would put the burden of paying higher property taxes on people who can afford to build huge homes.
At the same time, long-time property owners with modest homes would pay less in land taxes, allowing them to stay on the land.
The nine-member Kaua‘i County Real Property Tax Task Force (RPTTF) made those representations during a council meeting at the historic County Building yesterday.
Steve Hunt, chairman of the task force, said his group’s proposal marks a departure from a current tax system that puts more value on the land than it does on the building.
“Our concerns with the rising market as well as following markets for budgeting purposes is just the volatility in value,” Hunt said before the council meeting.
“It is something that is problematic for taxpayers to figure out what they pay each year (due to high-priced sales or repeat sales of properties that affect assessments of neighboring properties owned by long-time landowners), and so we are trying to stabilize that.”
The proposal recommends greater taxing emphasis on the building as opposed to the land, the opposite of what is being done under the current county tax system.
“So that is reflected in the recommendation for the 3-to-1 tax ratio (calling for increased taxing on buildings and less taxing for the land),” Hunt said.
If the proposal becomes law, people wanting to build large homes will pay more taxes on them, Hunt said.
“If somebody decides to build a 10,000-square-foot mansion for $3 million, you know, that sounds like a person who can afford to pay taxes on that,” Hunt said.
People owning properties that have been passed from generation to generation and have modest homes on them are likely to see “an abatement” in their land portion taxes, should the proposal be adopted, Hunt said.
The proposal does not call for the generation of more property-tax revenues to the county, Hunt said.
“We are keeping the same central base-tax revenues that are being raised,” Hunt said. “So what we are is just rearranging the furniture within a room.”
Last year, Kaua‘i County officials collected roughly $47.5 million in real property tax revenues, making up the bulk of the collected county revenues that are used to formulate a yearly county budget.
The other major change proposed by the tax group calls for taking an average assessment from five years of assessments between 1999 and 2003, and using that figure for taxing purposes, Hunt said.
Other key recommendations in the proposal include:
- Changes to land assessments, based on an average assessment, would be tied to the Consumer Price Index for Honolulu to “the previous year’s land value,” Hunt said;
- For assessments of buildings, improvements shall be assessed yearly at the replacement cost minus depreciation;
- Apartment buildings shall be assessed at their replacement cost minus depreciation;
- The current eight land classes used by the county would be reduced to two categories. The first would be a “long-term-residential category” for properties which are occupied only the owner, and those with long-term rental contracts. The second category would be a “general” one, for all other properties, including apartment buildings, commercial buildings and industrial buildings;
- Current special provisions for assessments of timeshare units shall be repealed. Such properties will be assessed according to their physical descriptions;
- Two current property-relief laws — a circuit breaker credit and permanent-home-use, tax-cap programs — would be repealed. As part of temporary tax-relief efforts, council members approved them while the tax-reform group studied ways to revise the current county tax structure;
- For the dedication of agricultural lands, a two-year “amnesty period” will be established, allowing an owner to cancel an agricultural dedication without penalty or rollback;
- Agricultural use values would be updated.
The tax group urged the council to approve the proposal in its entirety. The earliest it could become effective would be in the 2005 tax year, Hunt said.
Staff Writer Lester Chang may be reached at 245-3681 (ext. 225) or mailto:lchang@pulitzer.net.
