Posted on: Tuesday, July 27, 2004
Some farmers get tax break
By Johnny Brannon
Advertiser Staff Writer
The deadline for appealing property tax assessments passed months ago, but farmers may still qualify for a one-time tax break this year.
Those who face higher taxes under a controversial new assessment system for agricultural land can now seek a tax "compromise" while elected officials consider changing the system for future years.
City managing director Ben Lee said the administration recognizes that some farmers are caught in the middle when they farm but do not own their property, so the unusual step of considering tax compromises is warranted for a limited time.
"We don't want to hurt legitimate farmers, large or small," Lee said.
Owners and lessees who did not "dedicate," or restrict land to farming, can seek a compromise through the Department of Budget and Fiscal Services if they can show they are growing a crop and have a general excise tax license to sell it, he said.
Hawai'i Farm Bureau Federation executive director Alan Takemoto said he is cautiously optimistic about the plan and is encouraging farmers to apply for compromises.
"Hopefully, their taxes will be the same or similar to what they were in 2003," he said. "We'll see what the numbers turn out to be."
Waiahole Valley papaya farmer David Chinen said he received a letter from the city yesterday, informing him that the deadline to apply for the compromise is Monday. But he said the notice was vague and he was not sure how much of a break he and other farmers will receive.
"It talks about the city agreeing to sit down with the farmers on a case-by-case basis and working out a compromise," Chinen said. "The compromise would be what the farmers paid for land taxes last year and something in-between what we have to pay this year. It sounds very arbitrary."
Chinen said he paid about $220 in taxes last year for the 9.6 acres of land he leases from the state. His latest tax bill is $5,100, he said.
Many farmers have complained that their taxes unfairly increased this year because they lease land and have no authority to restrict it to farming for up to 10 years to qualify for a tax discount offered under the new system.
Mayor Jeremy Harris has vowed to veto a bill the City Council approved two weeks ago, which would allow a discount for all agricultural land, whether it's used for farming or kept vacant for future development. He said he would refuse to implement the bill if the council overrides his veto.
Harris says Bill 35 could cost more than $9 million and leave the city's budget illegally unbalanced; other opponents call the bill a blatant giveaway to big landowners who lobbied for it.
Lee said no compromises have been granted yet, and that any over $500 would need City Council approval.
Chinen is one of many farmers who have 55-year leases with the state in the Waiahole agricultural park. He said it is up to the state as landowner to dedicate the land to farming for up to 10 years so the farmers can qualify for a tax break.
But Chinen said the state has limited the land dedication to one year at a time.
"The state doesn't want to give a 10-year dedication because if the farmer gives up at the end of, say, six years, or there's no agricultural use on the land, there's a penalty that kicks in and other things that the state feels they're going to get stuck with it," he said.
Takemoto said the tax law needs to be changed so that farmers don't face similar problems next year. The federation will hold a rally in front of City Hall on Aug. 2 to remind people that the issue needs to be resolved, he said.
"We've got to still fix this, because there are too many gray areas," Takemoto said.
City Council chairman Donovan Dela Cruz said he hopes to create a task force to study how best to change the law.
Harris has said he will propose changes before he leaves office at the end of the year. Dela Cruz said the mayor's proposals could be reviewed by the task force, but that changes would likely be approved only after the panel makes a recommendation.
"I'm hoping he's going to really work with us to help protect agriculture," Dela Cruz said.
Takemoto said he supports the task force idea and wants the panel to include a representative for farmers.
Meanwhile, Chinen said he and the valley's other farmers will meet tonight to decide what to do about the compromise, adding that they may have to take what they can get.
"It remains to be seen how much meat this letter has. But it seems that the city people are calling the shots," Chinen said.
Curtis Lum contributed to this report. Reach Johnny Brannon at jbrannon@honoluluadvertiser.com or 525-8070.
