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Sunday, March 29, 2015
No Junior, You Can't Borrow the Car… I Sold It Last Century
By Tom Yamachika @ 6:01 AM :: 3976 Views :: Taxes

No Junior, You Can't Borrow the Car… I Sold It Last Century

by Tom Yamachika, President, Tax Foundation of Hawaii

Imagine what you would be thinking if your offspring came up to you and said “Mom and Dad, could I please borrow the car keys?” when you actually sold that car last century. Maybe you would be wondering if your child was under the influence of some illegal foreign substance.

Let's take a look at one of the many bills in our legislature this session, House Bill 1293. I'm imagining that this bill started off with a call from a constituent that went something like this:

“Representative, I have a big problem. There is grave injustice in our real property tax system.”

“What's the problem?”

“My dear Aunty has been living alone in her house since her husband passed away. She now has a serious medical condition and needs to be in a facility. So last year the real property assessor came in and said that no one is living in the house, so we can't let you have a homeowner’s exemption. ‘And by the way,’ they said, ‘the value of the property is a shade over $1 million so we need to reclassify your property as Residential A.’ As a result Aunty’s real property tax nearly doubled!”

“Oh, dear.”

“I noticed that there is a state law, HRS 246-26. It defines the homeowner exemption. Can we get it fixed so the same problem doesn't happen to others?”

“Sure, I’d be glad to do that.”

House Bill 1293 is designed to fix this problem.

Actually, the State used to administer the property tax back in the dark ages until the 1978 Constitutional Convention recommended, and the electorate approved, the transfer of the real property taxing powers to the counties. The counties were required to use the State’s exemptions in Chapter 246 for ten years, and then they were totally on their own. Yes, all of this occurred last century. At the moment, Chapter 246 is still on the books, but it does nothing and has done nothing for 25 years.

So House Bill 1293, if enacted, would accomplish…nothing.

Nonetheless, that bill was assigned to the House Committee on Finance. That committee heard it and passed it, and the bill went to the Senate. The Senate Committee on Consumer Protection and Commerce heard the bill and killed it (thankfully).

Hopefully, by now someone has explained to this constituent that he or she needs to go to the City Council, not the Legislature, to get this exemption fixed. Maybe the passage of the bill through the full House was meant to show the Council that there are lots of people who agreed that this is a problem.

The other problem, of course, is the existence of Chapter 246. Someone should have tossed it in the dumpster a long time ago instead of keeping it around for the past 25 years. Leaving it on the books is an invitation for confusion, as was evident here. We need to say, “Junior, take a look at the hook on the wall. There aren't any keys there.”

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