Honolulu Panel: Property Tax Exemptions Unfair
Dozens of exemptions to the city’s property tax system have rendered it unfair and inefficient.
That’s the conclusion of a panel put together by the Honolulu City Council to recommend how to overhaul the tax code.
After months of discussion and deliberation, the panel today will finish its work on proposed changes to the tax that pays for the bulk of city services.
The Real Property Tax Advisory Commission is at 3:30 p.m. at Honolulu Hale, and not again, if everything goes as planned. It’ll present a set of recommendations — principles, not specifics — that the Council may consider next year.
Civil Beat sat down Tuesday with Commission Chair Lowell Kalapa to talk about the broad goals and what might come next.
Kalapa, executive director and president of the since 1979, says he believes the to relieve the political pressure that comes with tax changes.
“It’s obvious that politicians don’t want to take the heat,” he said.
The recommendations will, according to Kalapa, advocate for the elimination or reduction of a number of exemptions, including those for homeowners, second homes, historic homes and nonprofit organizations, including religious institutions. He said the goal is to maximize “equity and efficiency” in the system, and one way to do that is to end the practice of having renters subsidize owners, young families subsidize retirees, or businesses subsidize residences.
Cutting a slew of exemptions might mean higher tax bills for many citizens, but it should make it possible for others to avoid hikes despite tough financial times.
“We do not believe that the recommendations we’re making should give Council license to just generate additional money. We don’t see our recommendations as an excuse for them to merely raise additional funds so they can close the budget gap,” Kalapa said, paraphrasing the foreward from the draft exemptions. “There is a phrase in our preliminary report that says we hope that enacting the repeal of, say the home exemptions will allow the Council to alleviate the pressure to raise taxes on all properties.”
Kalapa summarized the philosophy, saying “We should treat similar people alike and we should treat people who are in unusual situations differently. But on the whole, I think the other underlying philosophy, is we believe, at least the majority of us believe, that all property owners should pay something for the city services they receive.”
Granting some taxpayers total exemptions “breaks the accountability relationship” and disconnects them from a feeling of responsibility for the government services they receive.
Kalapa expressed some of those views in his weekly commentary on the Tax Foundation website this week, titled “.”
The recommendations won’t take the form of a bill, so it’ll be up to the Council to take action. And while the politicians could put the Commission’s report on the shelf, Kalapa said he expects they’ll take the recommendations to heart since they asked for the input.
The Commission will exist until June 30, 2012, and Kalapa expects that the Council might call members in to answer questions about tax policy during the budget process.
