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Restore home tax credit


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POSTED: Sunday, June 14, 2009

In a surprise move, the City Council rejected Mayor Mufi Hannemann's proposal that homeowners who live in their dwellings receive a tax credit. The mayor should veto the tax package and the Council should provide the credit as a small bit of relief to modest-income families.

The city largely depends on revenue from property taxes to pay for city services, and reduced home prices resulting from the current recession requires increased tax rates for the city to function normally. Hannemann proposed raising the tax rate for single-family homes and condominiums from the current $3.29 to $3.59 per $1,000 of property value, and reducing the tax credit for owner-occupants from the current fiscal year's $100 to $75. That would be a progressive move, providing the same credit regardless of the home's worth.

Instead, the Council approved Councilman J. Ikaika Anderson's proposal that the rate be raised to only $3.42, with no relief through tax credits. Hannemann correctly regards that as detrimental to the most vulnerable homeowners — low-income families and the elderly.

Anderson maintains that home value does not necessarily reflect ability to pay. That may be his intuition. In the vast majority of cases, however, we expect the home value certainly is an important indicator of wealth and income. If Anderson has information to the contrary, he should come forward with it.

Under Anderson's proposal, the owner of a home valued at median-level $600,000 would pay an additional $106.04 in additional taxes, Hannemann says, while the mayor's proposal would result in a $41.38 hike.

Revenue from the property tax ends up subsidizing many programs that don't generate enough income to be self-supporting, such as TheBus, Honolulu Zoo and municipal golf courses.

The Council has followed Hannemann's initiative to increase those fees, to the penny: raising bus fees from $2 to $2.25 and monthly passes from $40 to $50; raising zoo admission from $4 to $6 for residents, from $8 to $12 for visitors and, for children, $1 to $3; upping green fees from $16 to $19 for adults, $9 to $12 for youths, monthly senior passes from $32 to $40, and golf cart rentals from $16 to $19, and increasing the motor vehicle weight tax from 3 cents to 4 cents a pound.

Days after angry demonstrations near the zoo, the Council agreed to raise parking rates from 25 cents an hour to 50 cents along Kalakaua Avenue and Kapiolani Park, and to $1 at the zoo. Hannemann proposed $1.50 an hour, but he is smart not to press his case over that small but hot potato.