KAPOLEI — In a move some called a needed first step, the City Council yesterday unanimously approved a limited property tax break for residents who increasingly complain that soaring real-estate prices have made it difficult to pay their tax bills.

Under the new law, homeowners earning no more than $50,000 a year, regardless of age, will receive a tax credit of up to 4 percent of their income beginning in 2007. In other words, a woman whose house is worth $500,000 and is earning a maximum of $50,000 a year would end up with a tax bill frozen at $2,000.

City figures show the total assessed value of the island's residential properties shot up 26 percent in a year, meaning most homeowners' tax bills rose.

Francis Tom, an 85-year-old resident of St. Louis Heights, said the bill doesn't go far enough. Many council members agreed, saying the bill is just a first step.

"Who are we talking about? We're talking about the poor," he said, adding that most people who own a home won't fit into the criteria. "I live on a fixed income. But I'll be honest, I couldn't get relief," he said.

Last year, Tom's property taxes were $1,115. On Tuesday, he paid $1,998 for this year's property taxes — nearly an 80 percent increase.

"This bill doesn't really address the people who need tax relief," he said. "Everybody that owns property — they're not giving us any tax shelter."

City Council Budget Chairwoman Ann Kobayashi said the bill basically will be a cap on property taxes for those on fixed incomes.

"Many people, and especially our seniors on fixed incomes, are being taxed out of their homes," Kobayashi said during council discussions yesterday.

Kobayashi said the credit most likely will need to be revisited and tweaked to provide relief to a wider range of homeowners once an assessment of its impact is made.

Councilman Charles Djou applauded the efforts of the council to provide tax relief, but called it too little, too late.

He said he found it to be "a little ironic" that the council would approve tax relief soon after having approved an increase in the general excise tax yesterday.

"For me it is troubling that after we take a dollar, or in our case, hundreds of dollars, from people we are now flipping everybody back a nickel," he said.

Kobayashi countered that the main goal was to provide tax relief for families who need it most — low-income, fixed income, single-parent homes.

"It has everything to do with assisting families who cannot afford to keep their homes due to the high increases in property taxes," she said.

In the end, Djou supported the bill but said there were a number of things he had problems with, including people registering under false names to benefit from the tax credit. He also said Hawai'i has a large share of wealthy retirees from the Mainland who may not have a lot of income but have a lot of assets.

"(They) would be able to reap these benefits but the poor working-class families who don't own property will not," he said.

In drafting this legislation, a balance had to be struck between how much relief to give and how much the city needs to bring in to cover basic services, Kobayashi said.

Councilwoman Barbara Marshall brought up those concerns previously, saying a large drop in revenue would force higher taxes and cause other residents to foot the bill.

Mayor Mufi Hannemann's administration has said it favors this latest bill as a way to give much-needed relief.

Ron Kubota, a 63-year-old Mililani resident, said that while his elderly father would benefit from the tax credit, he wouldn't.

"It's not going to benefit most of the people," Kubota said. "It's going to make most of us have to pay more."

Kubota, who lives in a three-bedroom, two-bath house, said most people who own a home make more than $50,000 a year and that the council should consider a proposal that will reach more people.