Government Affairs Update
March 20, 2009
HAR'S EFFORTS CONTINUE TO PREVENT UNHELPFUL TAXATION BILLS
The Council of Revenues recently opined that the State is looking at a budget shortfall of $900 million over the next 3 years, adding to the estimated $1.8 billion deficit. Although the problem is clear, the State and Administration’s solutions are not yet defined, as we near closer to adjournment on May 7. Rest assured that HAR is continually monitoring, reviewing, and testifying against many taxation bills that would adversely affect REALTORS® and homeowners.
HAR believes during these tough economic times, it is extremely difficult for individuals and families to make ends meet. The value of the dollar is not what it once was, particularly when factoring in inflation and the high cost of living in Hawai‘i. As a result, it is a continuing challenge for Hawai‘i residents to manage expenses, from purchasing basic necessities to owning a home.
Any additional individual taxes will result in less money being circulated into the economy, at a critical time when the economy needs it. These funds could instead be used by individuals to help a homebuyer with a first home purchase, or to provide small businesses with funds to invest and improve in their companies.
THIS WEEK AT THE LEGISLATURE…
H.B. 1598, H.D. 1 and H.B. 1604 RELATING TO TAXATION. Imposes a new tax upon a lessor of real property for capital improvements made by a lessee upon the termination of a lease.
Position:
HAR opposed the bills because they could have the consequence of premature demolition or removal of improvements with a remaining useful life on non-residential properties awaiting redevelopment which may be delayed and/or planned for a number of years in the future. Also, it was noted in testimony that a lessor could also avoid the tax (and the cost of demolition) by having the lessee demolish or remove the improvements prior to the termination of a lease to non-residential real property.
Decision:
Committee held these measures.
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S.B. 1277, S.D. 2 RELATING TO HOUSING. Establishes self-help trust fund and increases the Conveyance Tax.
Section 4 proposed to increase the maximum Conveyance Tax rate on the sale of a condominium or single family residence for which the purchaser is ineligible for a county homeowner's exemption on the Real Property Tax from 35 cents per $100 (0.35%) to $8 per $100 (8%), an increase of 2,285%; and to increase the maximum Conveyance Tax rate on the sale of all other real property from 30 cents per $100 (0.30%) to $4 per $100 (4%), an increase of 1,333%.
Position:
HAR believes that, while self-help housing may have value, the Conveyance Tax increases set forth in S.B. 1277, S.D.1, will drastically increase the already high cost of housing, living and doing business in Hawai‘i.
Decision:
Committee deleted the Conveyance Tax increase.