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HomeMy WebLinkAboutCOM 0480.006 1998-2000 Bill No. 143 (Draft 2) BY BLANE T. YOKOTA ,,f~ RECFaVm1 al. COUNSEL iim~ i~ , GTE Rate.--- - - County Cou~cii DECEMBER 1, 1999 Chair Arakaki and Hawaii County Councilmembers: I am Blane Yokota, testifying on behalf of GTE on Bill No. 143 (Draft 2) which would amend Chapter 19 of the Hawaii County Code relating to real property taxes. Bill No. 143 (Draft 2) would end a number of exemptions from real property taxes, including the exemption set forth in Hawaii Revised Statutes Chapter 239 relating to the Public Service Company tax ("PSC Tax"). GTE respectfully ooaoses Bill 143 (Draft 2) for the following reasons: Basis for Opposition (1) Adoption of Bill 143 (Draft 2) and the commencement of taxation on the real property of public utilities by the Hawaii County while the State of Hawaii continues to collect the full PSC Tax would result in the unlawful double taxation of such real property. Impermissible double taxation exists where a second tax is levied on the same property in the same jurisdiction. (2) Even assuming, contrary to constitutional law principles, that such double taxation were legal, ultimately it will be Big Island consumers who will pay for such double taxation in the form of higher utility service rates. (3) Moreover, a tax driven increase in telecommunications service rates will increase the cost of doing business in Hawaii County for businesses in general and for high technology businesses in particular, thereby acting as a deterrent to the economic development and high tech growth that would benefit the county and its residents. ~80, 0~ Comm. No. File No. CC R DT res~ofod ~yNC-~L Ref. To: Ref. Date (iF~ > 1.QOa (4) Any attempt to implement a real property tax at the county level based on some measure of the gross receipts of public utilities would be unlawful in that the taxing authority vested in or delegated to the counties does not include any taxation on public utilities as going concerns or on the business of public utilities. The counties have the power to tax real property. However, the real property tax regime developed in Hawaii is based on the assessed value of real property. Moreover, that regime does not provide for the taxation of easements, rights of way, or any other limited interest in real property other than the fee interest in real property. (5) The process of determining the assessed value of the real property of public utilities will be expensive and time consuming both to determine the initial public utility real property base and as an ongoing matter. Because of the longstanding exemption of public utilities from traditional real property taxation, neither the county nor the public utilities are likely to have accurate real property assessments. GTE understands that the Hawaii County has already brought suit against the State of Hawaii, seeking a share of the PSC Tax revenues. GTE is also aware that the HSAC Legislative Package may include proposed legislation to effect such revenue sharing byway of an amendment to Chapter 239. GTE respectfully suggests that continuing to pursue both these courses of action is preferable to immediately implementing a real property tax on public utilities. GTE has traditionally supported legislative proposals to share PSC Tax revenues and will continue to support the same so long as such proposals disallow the double taxation of real property. Alternative Lanpuaae To Defer Actual Collection Of Real Proaertv Taxes Alternatively, in the event that the Hawaii County Council feels compelled to approve Bill 143, GTE respectfully proposes the following language be added to defer actual collection of real property taxes from public utilities: The assessment and collection of real property taxes against and from those public utilities previously exempted under Chapter 239 shall not begin before January 1, 2001. The proposed amendment merely defers, but does not remedy the concerns mentioned above. Moreover, in suggesting such language GTE is not waiving or otherwise conceding any arguments that could be raised against the simultaneous imposition of real property taxes by the State and the County. Nonetheless, GTE recognizes that including the above language in the ordinance will defer the impact of double taxation on GTE's ratepayers and the residents of the Hawaii County until after the upcoming legislative session and provide additional time for the County to pursue its ongoing litigation against the State. Conclusion: Based upon the aforementioned, GTE respectfully requests Bill 143 be filed.