When it comes to taxes, no one gets a free ride

THE ISSUE A City Council proposal would cut the residential tax rate while raising rates for hotel and business properties.

A 16-CENT drop in residential property tax rates would offer a small measure of comfort to Oahu homeowners who have seen their assessments jump in tandem with the values of dwellings in a super-heated market.

However, because rates for commercial, industrial and hotel properties would rise to cover revenue losses, under a City Council proposal, taxpayers can expect that prices for goods and services will go up as landlords and businesses pass their increases down the line.

The Council's budget committee plan also would cut $200 from the tab of owner-occupied homes, but the total reduction won't amount to much more than a couple of weekly grocery bills or three or four fill-ups at the gas station.

The proposal trims tax rates for single-family and apartments from $3.75 to $3.59 per $1,000 valuation. Calculated on the median value of $600,000, a homeowner would pay $290 less next year if he or she gets an occupant exemption, $96 less without the exemption.

Meanwhile, hotel and business property owners would see a 60-cent rate increase, from $11.37 to $11.97 per $1,000 valuation. They, of course, are not happy.

Hotel executives say the big difference in tax rates is unfair and that business are paying a larger share into the city's revenue pot than residents.

Not true, say taxpayer groups. Residential taxes, they and some Council members say, make up about 63 percent of overall revenues compared to about 35 percent from nonresidential taxes. Moreover, businesses -- hotels in particular -- place a larger burden on city infrastructure than individual residents and though the city receives a portion of the state hotel room tax, it isn't enough to cover the city's costs for services.

Whatever.

Saddled with fixed costs, such as debt and salary increases, and with the need to improve and repair sewers and roads, the city and the Council are stuck between a rock and a hard place. Much of the city's financial troubles can be blamed on former Mayor Harris, but some of the Council's long-time members are equally at fault for their reluctance to rein in his spending priorities, shifting of funds and lack of fiscal prudence.

Unless taxpayers are willing to do without some of services to which they are accustomed, they have little choice but to pay up.