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Kaua‘i County Council shifts tax break plan

LIHU‘E — After a Wednesday, April 19 county council committee meeting, a plan for broad Kaua‘i property tax breaks appears to have been shelved in favor of a more targeted proposal.

Council Chair Mel Rapozo presented an initial draft of a tax relief plan last week which would have provided a 10 percent tax rate reduction for commercial, industrial, agricultural, conservation and commercial-home-use classes, while cutting the homestead tax rate by 5 percent, in addition to a proposed 10 percent cut included in the mayor’s budget.

Under Rapozo’s draft plan, Resolution No. 2023-37, the cuts would be paid for by tapping the reserve fund, reducing the amount of money set aside for this fund from 30 percent to 27 percent.

Mayor Derek S.K. Kawakami presented a new proposal before the council Finance and Economic Development Committee on Wednesday, under which the breaks for commercial, industrial, agricultural, conservation and commercial-home-use would be scrapped, while the 5 percent tax break for the homestead tax class (owner-occupants) would remain in place.

“We’re recommending a further decrease of property tax rates for owner-occupants,” said Kawakami. “These are people who live Kaua‘i, breathe Kaua‘i, who work here, play here. These are the people that we want to provide further relief for.”

Targeting the homestead tax class would avoid the possibility of providing tax breaks for the large landowners and corporations who own much of the land in the commercial, industrial and agricultural tax classes.

Additionally, rather than drawing from the reserve fund, the mayor’s proposal would require the funds for the tax break to be found elsewhere in the budget.

“We feel that a 30 percent reserve is a responsible safety net or parachute for those unforeseen circumstances, so we’re going to propose to leave that alone,” said Kawakami. The amount of money in the reserve fund can affect the county bond rating, the mayor emphasized.

Kawakami also proposed an expansion of grant-in-aid money to farmers instead of the proposed agricultural tax breaks.

The mayor’s proposal was well received by the council, which voiced support for the changes to the plan.

Rapozo emphasized his initial plan was a first draft, and expressed his hope that tax breaks could be targeted at smaller homeowners rather than wealthy landowners and corporations.

“With commercial and ag … the benefit would be stretched across every landowner in those categories,” said Rapozo. “Whether the benefit would be passed on to the tenant would be out of our control.”

Council members were hopeful that tax relief for these other tax classes could be addressed in another tax reform bill that the Kawakami administration expects to introduce later this year.

This bill could implement tiers, allowing higher-value properties to be taxed at a higher rate.

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Guthrie Scrimgeour, reporter, can be reached at 808-647-0329 or gscrimgeour@thegardenisland.com.
Source: The Garden Island

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