WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers
For the Week of March 26, 2017
Yes, Toto, Tourists Also Pay Real Property Tax
By Tom Yamachika, President
On March 8, the Hawaii Department of Business, Economic Development, and Tourism released a study on Hawaii real property taxes.
It may be unusual for a State agency to do a study on a county tax. But this study appeared to be an outgrowth of a move by our teachers’ union during the 2016 legislative session, which we wrote about last year, to establish that our real property tax is too low. (Once that was established, the obvious strategy was to seek a surcharge on that tax to fund education, which we have written about in our last two weekly commentaries here and here.) The bill that we talked about then didn’t pass, but its substance was incorporated into the state budget bill, obligating DBEDT to do the study.
One of the study’s key findings: “Nearly one third (32.3 percent) of the property taxes were contributed by property owners residing out-of-state.”
To us, the fact that some of our real property tax is being exported is not news. Honolulu’s “Residential A” property classification, for example, was designed to squeeze more dollars out of land owners who had residential properties they didn’t live in. The idea was that most of these absentee owners lived out of state and maybe out of the country, so they could help foot the bill for those of us who actually live here. In addition, residential property is not the only property in town; all counties have different, and more expensive, property classifications for commercial, hotel/resort, and perhaps timesharing uses. A good amount of tax in those classifications is paid by nonresidents.
Rather, the news is the extent to which the tax is exported – nearly a third. This number blows a large hole in the City & County of Honolulu’s principal argument in the rail debate. The City administration had been arguing forcefully that the best solution to fund rail is the GET surcharge, and so that the surcharge should be extended forever. Why was it the best solution? About a third of the GET is exported, they said, and if the surcharge is not extended the fiscal shortfall would need to be made up by other county funding sources, the largest of which by far is the real property tax. But the real property tax falls almost exclusively on our residents, the argument goes, so it would be hurting all of us a lot more. Mayor Caldwell’s State of the City address in February 2015, for example, included: “Why would I as mayor want to give the visitors a break and make all of us pay everything? Let’s make the visitors pay one third.”
If a third of the GET is exported, as the City claims, and a third of the property tax is exported, as the DBEDT study indicates, then the argument doesn’t hold water.
Moreover, the extent to which the GET is exported is a matter of debate. The Hawaii Free Press, using a City Auditor report, concluded that 14.1% of the GET is exported. The Foundation came up with its own estimates using calculations from Hawaii Tourism Authority and Department of Taxation data for 2011-2013, and found that the proportion of the surcharge attributable to visitor spending was 15%-20%. If those numbers are closer to the truth, then the City administration has it backwards, and we might be able to export more tax using the real property tax than by using the GET.
But then again, if we rely more heavily on the real property tax to fund transportation, then what is going to happen to the real property tax surcharge to fund education? Clearly, this debate may lead to some cascading effects. We do hope that our policy makers will take the time to consider these matters fully before deciding to amplify the burdens on an already beleaguered populace.
To view the archives of the Tax Foundation of Hawaii's commentary click here.
West Maui is growing and will even become more dominant in Revenue Production for County of Maui in future.
(To Download the Charts below in PDF (to view larger or print, click here)
It's that time of year again. New real property tax rates have been released for the July tax installment - please see below. Additional information regarding your taxes can be found at the Maui County Real Property Tax Website.
Through the past efforts of West Maui Taxpayers Association (WMTA )and others in community, we have been able to successful lobby and work with County and State officials help West Maui advance in health and safety. This included the recently completed Lahaina Skate Park. With the help of WMTA Board Member Pamela English working with key members of the community, the County as well a Federal Grant the Skate Park is now open to provide safe environment for the skating community to enjoy.
In addition, the most notable project WMTA is known for is building the Napili Ambulance and Fire Station for West Maui. This was only possible through the efforts of the WMTA members and select Board of Directors who put a 2nd mortgage on their home to get this project funded and completed. This in itself has saved lives as well as helped to lower insurance premiums for homeowners, hotels and businesses . Before the Napili Ambulance and First Station area property was classified as PC10 and owners were unable to purchase insurance under normal stock insurers. Since the creation of the Napili Ambulance and Fire Station property was classified as PC5 and owners could now purchase under normal insurers at an average of more than 50%+ savings. That means property owners in Kahana/Mahinahina/Napili and Kapalua have saved millions of dollars in addition to the improved medical outcomes from improved emergencies, including literally lives saved!
As WMTA notes that response from State and County has gotten better through the years, it can be proven that West Maui deserves a lot more!
Estimated Real Property Taxes Revenues (RPT) islandwide (Maui County) is $240,332,468. West Maui generates $94.2M (39.6%) in Real Property Tax Revenues (See “Graph 1” below). Of the $94.2M, $36M (38.3%) generated directly from Hotels and Resorts, and $23.6M (25.1%) are from Timeshares. (See “Graph 2” below)
Now take a look at Graph 3 below. Note that the proposed Capital Improvement Project Budget has sources of funds beyond RPT as the graph shows. That equals to West Maui is receiving 27% of the $94.2M of their total contribution through RPT collections, in improvement projects.
So as you can see, West Maui ranks the highest in estimated revenue source for via Real Property Tax. However, West Maui does not receive equal percentage of monies being reinvested into the community. We recognize that an equal amount of reinvestments is not practical or desirable, we have urgent needs for sewer treatment odor improvement, affordable housing and improved access to emergency medical care.
Help us help YOU bring more of our tax dollars for re-investment into West Maui.
Our Board of Directors live, work and play in West Maui. They have been hard at work lobbying on behalf of visitors and residents. However, with limited resources – WMTA can only do so much. How can you help– become a member of the WMTA, and if you have the time, volunteer as well.
Why become a member?
Become a member so that WMTA has the resources for its Board and volunteers to get out and make your voices heard. Whether it be through membership events presentations, newsletter mailings, membership booths, other special mailings, website and social media – we need the help of our membership dues to lobby and bring awareness to our issues.
For our members, and the community WMTA:
· Absentee owners and vacation property owners
· Businesses in West Maui,
· Maui residents commuting to their job in West Maui from other parts of the island,
· Maui residents and vacationers from all over the island, other states and other countries who come to play on West Maui beaches, shop at West Maui shops, eat at West Maui restaurants ~ and their family and friends!
· Give a gift membership to a family or friend when joining or renewing your dues
CLICK HERE TO JOIN TODAY!
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August 17, 2017
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November 14, 2017
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