Tax expert criticizes
2 proposals for Kauai


Friday, May 21, 2004

At a forum May 14, Kauai County Tax Task Force chairman Steve Hunt said: "It's a little hypocritical to back things that cost money while reducing the tax burden on some taxpayers." A story on Page A6 Tuesday incorrectly attributed the comment to Kauai Deputy Finance Director Eric Knutzen. Also, Knutzen's name was misspelled as Knudsen.

The Honolulu Star-Bulletin strives to make its news report fair and accurate. If you have a question or comment about news coverage, call Editor Frank Bridgewater at 529-4791 or email him at

LIHUE >> Tax Foundation of Hawaii President Lowell Kalapa says Kauai residents will wind up paying for two tax reform measures proposed for Kauai.

"The part I don't like about both of these proposals is there would be a shift in the tax burden from residential property owners to business property owners," Kalapa said Friday at a Kauai Chamber of Commerce program at which advocates of the two tax measures outlined their programs.

In the long run, homeowners rather than businesses would pay the higher taxes because the businesses will pass them onto their customers.

"It will show up in the price of bread, the price at the car wash and the price of gasoline," Kalapa said.

The two tax reform measures are:

>> A proposal by a county task force that would radically shift the way property is valued for tax purposes. Instead of valuing property on its market value based on sales of comparable properties, the task force has proposed valuing buildings on their replacement cost less depreciation.

The aim is protect longtime residents who have seen their property values -- and taxes -- skyrocket since wealthy investors began buying up Kauai property at high prices beginning in late 1998.

>> The initiative filed by community group Ohana Kauai, which would roll back tax bills on owner-occupied residences to 1999 levels. Tax bill increases would be capped at 2 percent a year.

Deputy Finance Director Eric Knudsen called Ohana Kauai spokesman Walter Lewis a "hypocrite" because Ohana Kauai also advocates construction of new waste-water treatment facilities on the island while promoting tax cuts.

Knudsen said the Ohana Kauai proposal, if it passes in November, would result in a downgrading of Kauai's bond rating. That would mean higher interest rates on bonds, which would result in higher taxes, Knudsen said.

But the real criticism came from Kalapa, who said there is a lack of accountability on the part of elected officials in both proposals.

Kalapa suggested another initiative freezing county government spending.

"You don't have a tax revenue problem on Kauai, you have a spending problem." Kalapa said. "The real problem on Kauai is unrestricted (county government) spending."


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