Property value raises warrant tax changes
The mayor and City Council are studying ways to reduce property tax increases caused by raises in property values.
RESPONDING to complaints about property tax increases based on soaring home assessments, Mayor Hannemann and City Council members agree that reductions are necessary
. While some are suggesting ways to help homeowners they perceive to be hardest hit, a fair and more efficient method would be a broad increase in home exemption amounts for owner-occupants.
Councilman Gary Okino has suggested such a formula, weighted perhaps too heavily on the basis of the homeowner's age. The tax system already is graduated on that basis, with deductions ranging from $40,000 for owner-occupants younger than 55 to $120,000 for those 75 and older.
Okino's proposal would increase the range much further. He proposes to raise the home assessment deduction for those under age 55 to $100,000. Deductions for older homeowners would range from $150,000 for those 55-60 to $350,000 for those 75 and older.
Okino says his formula would result in tax reductions ranging from $337.50 to $862.50. It would take effect next year, but he proposes a one-time tax credit this year reflecting those projected tax cuts.
Hannemann initially ruled out tax cuts as an option but then proposed a one-time reduction of $40 million in paybacks beginning in August. He suggested they could be based on age, income and how long the owner has lived in the house. Council Chairman Donovan Dela Cruz and budget chief Ann Kobayashi have proposed credits and reduction qualifications that also could complicate the system and add to the bureaucracy.
Age is not the only consideration affecting tax affordability. Many young homeowners are faced with family and education costs and high mortgage payments from recent purchases. Many seniors have their homes paid off and can better afford Hawaii's property tax rates, which remain the lowest in the nation; in most states, property taxes pay for schools. Trying to examine such individual factors to determine the need for tax reductions would be impossible.
Okino is right in saying, "I think it's time now to help the everyday homeowner." Some families are facing a near-doubling of their property taxes because of the sharp rise in property assessments. His approach is the most sensible to emerge from City Hall in dealing with a problem that some people regard as a financial crisis.
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