Thursday, March 28, 2024
Hawai'i Free Press

Current Articles | Archives

Sunday, December 16, 2018
The County Strikes Back (part 4)
By Tom Yamachika @ 5:00 AM :: 5447 Views :: Maui County, Taxes, Tourism

The County Strikes Back (part 4)

by Tom Yamachika, President, Tax Foundation Hawaii

We continue with our series about a timeshare association suing Maui County seeking to invalidate its “Time Share” property classification, with the county then striking back. 

This week, we look at whether the property classification challenged was valid.

The circuit judge on Maui’s conclusion was that it wasn’t. He concluded that under section 3.48.305 of the Maui County Code, the “County may consider only the actual use of real property when creating a real property tax classification; it has no authority under the MCC to consider anything else.”

That code section, however, says that land and buildings are classified upon consideration of the real property’s highest and best use, and then lists some exceptions. It also says that condominium units are classified upon consideration of actual use, and then lists definitions, one of which a definition of the Time Share classification.

First, we need to notice that actual use and highest and best use are completely different. Highest and best use primarily depends on zoning and has nothing to do with the current owner is currently doing with the property, which is actual use. So, someone running a farm in the middle of an industrial district would have a “highest and best use” as commercial property but “actual use” as agricultural property.

Next, the tax code is riddled with classifications, credits, and exemptions that have nothing to do with actual use. I group all three of these devices together because they all assign financial consequences – an owner or renter pays more tax or less tax – depending on whether certain conditions are met. All counties have such devices that depend on use, and they also have those that don’t. For example, all four counties exempt “kuleana land,” which depends on whether its owner is a lineal descendant of the persons who received original title from the Kingdom of Hawaii. All four counties exempt property owned by disabled veterans, persons affected with leprosy, and persons with impaired sight or hearing or totally disabled, which are not uses of the property but medical conditions of its owner.

Of these, the latter three exemptions were carried over from when the State was administering the property tax, before the 1978 Constitutional Convention. This is significant because when the Convention recommended, and the voters approved, transferring the property tax power to the counties, there were constitutional provisions that required all counties to keep the basic structure, rates, and exemptions then in place for eleven years. Those exemptions, therefore, were specifically approved in our constitution – and they didn’t depend on property use.

If it were held that differences in real property tax liability must depend only on property to use to be valid, what would happen with the exemptions, credits, and credits on all four counties? And what would happen with the “Residential A” property classification here in Honolulu, which kicks in if a property doesn’t qualify for a homeowner’s exemption and is valued at $1 million or more? Homeowner classification is based on use, but valuation of a parcel clearly isn’t.

Ultimately, of course, the higher courts will decide the validity of the Maui real property tax classification system. The job isn’t easy, and the arguments we’ve made here might turn out to be completely wrong. But they will give us things to think about while the parties are considering what to argue and while the courts will be mulling over this case.

---30---

Related:

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

Aloha Pregnancy Care Center

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Moms for Liberty

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT