The City Council might consider reforms of some property tax exemptions, but reducing or eliminating the standard exemption for Oahu’s 144,000 homeowners would be a tough sell to the public in an election year, the Council’s budget chairwoman says.
"If you remove an exemption, it is like a tax increase," Budget Chairwoman Ann Kobayashi said Tuesday. "Everyone’s having a really hard time right now. I know the sewer fees are going to go up. Water rates are going to go up. Electricity rates have gone up.
"That’s why we’re looking at the tax system as a whole to see how we can make the city government run more efficiently."
The committee on Tuesday heard from members of the public on proposals outlined by the Real Property Tax Advisory Commission, an independent panel the Council formed last year to review all tax exemptions. Some exemptions have been in place for decades and have been criticized for giving tax breaks regardless of a property owner’s ability to pay.
"We’re going to gather all this information, go over it and when the (mayor’s) budget comes out, we’ll certainly look at the information we got today," Kobayashi said. "Even if we don’t need more revenue, which is possible, we’ll still look at removing some of those exemptions."
Among the commission’s proposals were limiting exemptions for nonprofits and basing reductions on a percentage of the property’s value; providing breaks to historic homeowners based on a percentage of the property’s value while allowing qualified maintenance expenses to lower the tax bill; and repealing exemptions for credit unions and owners of so-called kuleana lands.
Members of the public, nonprofits, historic home owners and others urged the Council to carefully consider any changes, saying rescinding some exemptions could have unintended consequences.
"Credit unions have not taken our tax-exemption, nonprofit status lightly," said Sylvia Young of Hawaii USA Federal Credit Union. "We live our philosophy of people helping people."
Many churches and other nonprofits pay a flat rate of $300 in property tax versus the standard rate of $3.50 per $1,000 of property value.
Walter Yoshimitsu, executive director of the Hawaii Catholic Conference, the public policy arm of the Roman Catholic Church in Hawaii, noted that the church is a large landowner but that it also provides community services.
"If church is taxed on a percentage of value of our property, we just can’t afford to pay all of that and also provide all of the services that we do," he said.
Hawaii News Now video: Nonprofits may face property tax hike
