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• Curtis Tyler From: "Cavis/Bertrand" <caber@kona.net> To: <ctyler@interpac.net> Sent: Monday, November 03, 2003 5:36 PM Subject: Property Tax Law Revision To: Harry Kim, Mayor Curtis Tyler, Council Member From: John Bertrand (caber@kona.net) Re: Proposed Changes to Hawaii County Property Tax Law �q_A$ 1 oft The Sunday newspaper article on the proposed changes to the Property Tax law caused me to do some thinking on the subject, which is detailed below: We have owned property here since 1986 and lived here since 1993. We have an 8 acre farm north of Holualoa. ` I believe that for a tax system to work well it has to be fair. The proposals to change the property tax system to be more like California's under Prop. 13, I believe, will take a somewhat unfair system and turn it into a very unfair system. I lived in California through the years leading up to Prop. 13 and for many years thereafter. Prop. 13 created many problems regarding funding local services which may or may not apply here. However, any way you look at it, the proposition resulted in a very unfair system of taxation. As an example, we purchased a used house in the late 70s. The house beside us was built by the same contractor, but was slightly newer and slightly larger. Our property tax was about double that of our neighbor, who was a dentist and well able to pay as much as we were. And that was right at the beginning of the implementation of the law. Now there are discrepancies many times that. Such a system totally skews the fairness of the property tax and does not discriminate on ability to pay. I empathize with people whose property values have escalated beyond their ability to pay (and it could happen to us in the future). But creating a nightmare similar to California is not a good, nor fair answer. Basing a system on ability to pay would be better, if one could come up with a workable formula. But I'm not sure that is feasible, since it would require the county to have access to income information, among other things. A system which seems to me to likely be workable would use the present proposal as a base, but would add a feature, based on the following premise. When a tax break is given, the property owner benefits, while the County and taxpayer population as a whole suffers. When the property sells at an inflated value over what it was being taxed at, the property owner again benefits, while the County does not. I would propose that the property owner's tax bill would show two figures. He or she would be liable for the one with the tax breaks at this time. The second figure would show what would be added to the bill without the tax breaks. That figure would accumulate and be due upon sale of the property. This would allow the social engineering that is behind the present and proposed laws, while at the same time ultimately treating properties equally. A side benefit of this (as well as with the present proposal) is that it might encourage people to hang onto their properties for the long- term. 11/5/03