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‘Talking Tax’ hosts pan bill to let state levy property tax ‘surcharge’

Hawaii’s Constitution currently grants counties the exclusive right to tax real property. But some state legislators want to change that.

On the latest episode of “Talking Tax” on ThinkTech Hawaii, co-hosts Tom Yamachika and Mark Coleman discussed HB1537, which is proposing a constitutional amendment that would authorize a “state surcharge on real property taxation levied on residential investment properties valued at more than $3 million.” 

Yamachika, president of the Tax Foundation of Hawaii and a Grassroot Scholar, said the situation feels a little like Groundhog Day, since “in 2018, we had the same thing going on.” 

He said the 2018 ballot question was invalidated by the Hawaii Supreme Court for being vague and misleading, with one of the issues being that it never mentioned the word “tax.” 

Coleman, managing editor at the Grassroot Institute of Hawaii, said the question also never mentioned that it would set a serious precedent by letting the state tax real property, which now is the exclusive territory of the counties.

The new language of HB 1537 aims to address previous concerns, but Coleman said he still is wary. 

“Even if this language were allowable by the Supreme Court, it just seems to me that perhaps this requires a lot more discussion than a small amendment,” he said. “I’m wondering if such a substantial concept shouldn’t just have its own constitutional convention. I mean, this is a major change in how we run things in this state.”

Yamachika warned that such a change would pave the path for further state-imposed taxes on real property. 

“Once you create that hole in the shield, the hole’s not going to shrink. It’s going to expand and cover more things,” he said. 

Yamachika and Coleman also raised doubts about the proposed use of the tax revenue — funding the Department of Education.

Coleman said the department already receives 20% to 25% of the state budget, “and yet, they want more money every year, always” — even as DOE student enrollment has been declining, its performance standards are poor, and it is not very good at spending the money it already gets for construction and from its school impact fees.

If you would like to hear the entire conversation, click on the image below.

 

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