Tax plan could aid some renters
The mayor is trying to balance a proposal to help homeowners
Mayor Mufi Hannemann is proposing a one-time credit of $150 for low-income renters as part of a package of property tax breaks he will submit to the City Council.
"We realize the run-up in property values in recent years has raised property taxes for many residential properties. Certainly in the case of rental properties, the fear has always been that the landlords often pass those increases on to their tenants," Hannemann said. "This is part of some of the steps that we'd like to take to ease the burden on residential property owners."
Hannemann said the proposal, which could cost up to $10.5 million, is in response to concerns by City Council members over his proposed homeowner classification to provide a lower tax rate for owner-occupied homes.
Some councilmembers argue that if the property tax rate is lowered for homes occupied by owners, then other residential properties, including those occupied by renters, would see higher taxes. Those tax increases would be passed onto the renters through higher rents, they say.
"I will continue to insist that if we want to help the single homeowner-occupant, that we will need to establish a separate classification," Hannemann said. "So for those who say that we can't go there until we provide relief for renters ... that's why I'm putting this out here."
The requirements for renters to claim the tax credit include:
» Filing for and receiving a Hawaii state 2006 income tax credit for low-income household renters. That tax schedule will be required to file for the credit.
» Being a Hawaii resident with an adjusted gross income of less than $30,000.
» Paying more than $1,000 in annual rent.
The city estimates that 70,000 taxpayers will be eligible for the credit and has asked the state for a list of renters who qualified for the state income tax credit.
If the Council approves the renters' credit and the state provides the list, those eligible will receive a check from the city in the next fiscal year, which begins July 1.
The credit will be paid from an expected budget surplus, an amount that Hannemann declined to make public.
Members of the City Council say they welcome the mayor's proposal in the mix of property tax proposals.
"I think it's a good start, but I'm not sure it goes far enough to help all the people who really need the help," Council Chairwoman Barbara Marshall said.
She said councilmembers also will be concerned that it is a one-time credit, "because it doesn't provide any kind of long-term benefit," she said. "I'm willing to work with (the mayor) on this."