Sunday, August 7, 2005


Property tax measure
falls short of relief


The City Council is set to vote on a property tax relief bill and another measure to increase the excise tax.

ELECTED officials find it difficult, if not impossible, to reject a tax cut bill.

Even if the measure is flawed. Even if the tax cut may increase government bureaucracy and costs. Even if loopholes are there for the exploiting. Even if the relief the bill contains may be a wee drop in the bucket for the few willing to jump through hoops to qualify.

Saying no could jeopardize a political career, particularly when voters aren't attentive to details.

So it is unlikely that members of the City Council will turn away the current property tax relief proposal when a final vote is taken Wednesday. They can claim that at least the bill is a step in the right direction.

A thriving housing market throughout the state has sent property values through the roof. On average, the value of homes on Oahu has climbed 26 percent, according to the latest assessments, pumping up tax bills significantly.

The Council is keenly aware of taxpayers' displeasure with the raising of a host of city fees and levies -- from sewers and facility rentals to vehicle weight and parking meters. Also on Wednesday, the Council is expected to approve tacking on a half-percent to the state's 4 percent excise tax to raise money for a mass transit system, placing another burden on city taxpayers.

The property tax bill is designed to deliver something members can label a "cut," but it appears relief will be minimal.

To qualify, property title holders would have to earn no more than $50,000 a year. They would be offered a tax cap of up to 4 percent of their income.

Councilman Charles Djou points out in a column on today's Commentary page that a property owner could evade higher taxes by transferring title to someone whose income level fits the bill. For example, a couple could list a home under just one of their names or under an adult child whose income falls below $50,000. Djou also argues that a retired couple living in a high-valued home, but who draw a pension below $50,000, would unduly benefit.

The credit was proposed as one way to offset the half-percent rise in the excise tax, which is levied on almost all sales of all goods, such as food and clothing, and service transactions. The tax has a greater impact on lower-wage earners since they pay a higher percentage of their income, and the credit won't match the pending increase.

The credit would reduce property tax revenue -- by how much no one can say with any certainty -- and could force the city to raise other taxes or fees to make up the difference.

To provide equitable relief, the Council simply could lower residential tax rates, but the city would have to reduce expenses likewise.

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