Sensible property taxes

When I was young, I thought that once you own your land and your mortgage is paid in full, it is yours forever. I didn’t understand property taxes.

My first reaction is, Why should we pay taxes on something we already own?

I don’t have an answer to this one. If you do, I’d like to hear it.

My second question is, Why do we need property taxes at all?

In Hawaii, property taxes pay for city and county programs. Unlike other states, public education is funded by the state, not property taxes. That’s why Hawaii has a relatively low property tax burden compared to other states, ranking 37th in the nation in 2007, according to the Tax Foundation.

In 2009, Hawaii raised $1,384,029,000 in real property taxes, (Real Property Assessment Division, FY2009-2010). Property tax rates ranged from $2 for homeowners in Maui and $3.42 for residences in Honolulu, to $12.40 for commercial/industrial/hotel/resort property in Honolulu and $14 for time-shares in Maui (per $1,000 net taxable property).

We already pay for water and sewer services; maintenance and upgrades should already be factored into our monthly bill. Our roads and street lights should be funded by vehicle registration fees and licenses. But what about public parks and services? Maybe there are city services that we need to pay for.

So the next question becomes, How can we make property taxes more fair and reasonable?

* Create a flat property tax fee based on lot type, lot size, and building square footage. I don’t know exactly how the formula would work, but we shouldn’t base home valuations on neighborhood sales or the “real estate market.” That’s unfair to homeowners who have no intention to sell their home, and it’s based on speculation.

* Limit property taxes to a 2% annual increase (or decrease). We shouldn’t have to pay soaring property taxes because the “real estate market” is booming; and the city shouldn’t suffer if there is a dramatic drop in home valuations.

* Charge a separate fee for residential trash pickup. It’s unfair to offer curbside trash pickup for residences, but not condominium or apartment buildings. I hate to advocate another tax, but maybe we should consider adding a residential trash pickup fee in order to be fair to all homeowners – and keep property taxes low for everyone.

I don’t know where we got the idea for property taxes. I don’t agree with them, but I don’t think they are going away. So we need to ensure that they are reasonable and fair to all homeowners. What do you think?

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