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The Honolulu Advertiser
Posted on: Sunday, January 29, 2006

Property tax relief: Burden getting too big

The poor, indeed, are getting poorer. And, it seems, so is the middle class.

And this observation, underscored in recent statistics from think tanks, shouldn't be lost in the current discussions about the need for property tax relief on O'ahu.

A joint study by the Center on Budget and Policy Priorities and the Economic Policy Institute indicates that the income disparity is growing between the upper 20 percent of households and the lower 20. The richest one-fifth of the population in Hawai'i is now earning roughly seven times as much as the poorest; they were earning less than five times as much in the 1980s.

As for the middle class, they're also falling behind. The top earners now bring in 2.5 times as much as the middle 20 percent of households, up from a ratio of 1.8 two decades earlier.

Let's hope that our elected leaders are paying attention.

Ann Kobayashi, the City Council member who chairs the Budget Committee, penned some of the proposals now under consideration. She admitted that she began by favoring only those in the lower-income categories, but is not so sure of her stance now. "There is this cry to help everyone," she said.

That cry resounds, loud and clear. Add to the mix higher vehicle weight taxes, higher sewer fees and the looming excise tax hike and it's clear taxpayers are taking a hit.

The elderly and others on fixed incomes do need extra help because they particularly are badly situated to pay whopping increases in taxes. A proposal to increase the tax exemption for homeowners with declining household income would help those at the lower end of the wage scale. And a break for landlords renting to low-income residents holds promise because it both lowers their tax bill and addresses the shortage of affordable housing.

But the rest of the homeowners deserve a measure of help, too, perhaps through a modest reduction in the tax rate.

Any measure of tax relief, of course, also requires evaluating existing sources of revenue to ensure basic services are adequately funded. Once the council strikes a balance between providing tax relief and city services for this year, members must consider alternative revenue sources and other ways to bring in the dollars without breaking the taxpayers' backs.