Running head: REAL ESTATE PROPERTY TAX DECREASE IN THE STATE OF
HAWAII.
Real Estate Property Tax Decrease in the State of Hawaii.
Student's Name.
Institutional Affiliation.
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REAL ESTATE PROPERTY TAX DECREASE IN THE STATE OF HAWAII.
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Real Estate Property Tax Decrease in the State of Hawaii.
Introduction.
Real estate property tax plays a vital role in governing the finance of different
departments and sectors in a country. Such decisions would aide in an additional allocation of
money such as housing and supply, tourism, and also the cost of living. Real estate property
research and definitions imply that through income sources, tax is applied, and hence it's
impossible to avoid. Additionally, it becomes easy to collect the tax in question. In regards to the
tax, it can be channeled out of the state as property owners who would most likely reduce the
burden imposed on Hawaiian residents. This tax is commonly is founded based on the concept of
market value. Therefore, the market value plays a vital role in the percentage to be imposed as
the economy grows or progresses. The basis of the tax levied may be based on land only, both
grounds and buildings, or any other related activities that are in line with these factors. In this
paper, I shall be discussing an analysis based on real estate property tax decrease in the state of
Hawaii and actions that would be highly recommended after that.
Assessment of the Current Budget.
Counties in Hawaii experience a less revenue-raising authority that governs the counties,
unlike most of the practices being carried out in most states. Property taxes are by far the most
accountable in generating the highest percentage value based on the local government authority
in the collection of revenue in Hawaii (Mak, 2018). This is brought by as a result of having
limited taxing authority within Hawaii. In Hawaii's property taxation system, there are nine to
ten distinctive counties bearing property classes. These counties include Honolulu and Hawaii
counties and Maui and Kauai counties, respectively. The institutions which face stern tax
implications are properties that are based on visitors and tourists related stuff such as vacation
REAL ESTATE PROPERTY TAX DECREASE IN THE STATE OF HAWAII.
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rentals, hotels, and resorts. The government makes this step to impose export taxes on
nonresident owners and visitors. It is because Hawaii is a tourism-dependent state and hence the
increased chances of having an asset to impose a tax on.
Only the four-county governments in Hawaii apply the principle of property tax, and
according to the stipulated rules and regulations of taxation, only real property gets taxed. There
is a sole discretion of how tax is being administered in each county. It involves the inclusion of
which property is t be taxed, at what rate, and who gets to experience the tax relief benefits.
However, all properties that are viable to be taxed are accustomed to a 100 percent market value,
and an additional assessment of the property is done annually. Hawaii has an unusual feature that
comprises of a sizeable number of properties to be leased. When it comes to renting housing, the
owner of the home can own the improvements, but his part is to let the land. Basing this concept
on property taxes, the fee is what gets sampled when the ground gets assessed for taxation.
Additionally, the tax bill produced semiannually comprising of both tax on land an on
improvements is paid by the lessee as compared to ordinary occasions where the lessor would be
responsible (Sally Kwak, 2011).
The government of Hawaii strives to impose taxation of property to gain revenue that
would be channeled into other developments within the state. The Budget accounts for land
property tax rates to be included in the planning and development of the country. Hawaii being a
tourist-based state, hugely depends on the tax rates that exist on land as compared to most of the
other taxes. As a result, this grows to be one of the most sought ideas and resources of tax.
However, through an analytical analysis of several factors that have been observed by specialists
and economists, Hawaii imposed some relative reduction on property taxes, which affected few
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counties within the state. According to (Krischke, 2019), Honolulu and Maui county faced a
decrease in property tax which varied from different companies.
Effects of the Decrease in Property Tax in Hawaii.
The Budget of the State of Hawaii is elaborated and submitted to the Legislature every
six years under the Planning, Programming, and Budgeting System (PPBS) since 1970. It
consists of two corps: a principal Budget and a complementary Budget. Before continuing to
Analyze the Budgeting of the State of Hawaii, let's take a moment to look at the PPBS. This
analysis will lead to the management of the possible negative working experience of the people
in this region. There are several points that one can gain as a result of the assessment of the
budgeting approach that was put in place, as well as the benefits that may be aligned with the
decision that is made. The transport system in the nation stated above is one of the concerns that
the associated leaders need to emphasize more. This assessment of the transport system will
assist in ensuring that there is the application of measures that may lead towards the
improvement of the areas that may lead towards the overall increase in the financial gains in the
nation.
The PPBS or Programming and Budgeting System was first used in 1965 in local
and state governments. It is based on expenditures that are seen as programs of work, characters,
and objects. This type of Budget falls mainly between an object budget, traditional as well as the
performance budget and has gained interest in recent years due to its multi-year projections and
improvements in measurements and its outputs, and the qualified and analytical personnel
involved in its development (Hatry, 1971). In the state of Hawaii Budget (2012 - 2016), the total
expenditures were calculated, taking into count this General topic: include the crucial means of
transport in the nation, comprehensive healthcare delivery system, the cultural as well as
REAL ESTATE PROPERTY TAX DECREASE IN THE STATE OF HAWAII.
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recreation sector, and the higher education. Other areas include economic development, natural
resources development, as well as the housing sector.
On the other hand, in the same Budget, the total revenues that produced incomes where
classified in these areas: vehicle surcharge, Franchise, and other taxes, and Non-taxes, Interest,
and investment. According to the Hawaii State Department (Becker, 2016), there are other
sources of financial support for the nation that leads towards the significant stability in the
financial income in the country. Through the improved assessment of the possible effects that
may come from the different decisions that the nation may make, the chances of failure
concerning this issue are well managed.
When there is a reduction in taxes imposed on property, it would mean that land and
property would be easier to afford, and people would find something to do with their prices of
lands or property for that matter. However, it would mean that this decrease will affect the
current state of the county government as it somewhat used to rely on the revenue coming from
these assists the county of Hawaii would need to find alternative measures to supplement the
percentage that was reduced from the property tax. It would be forced to depend on other local
amenities such as personal income tax and the tax imposed on goods. This would be a
challenging factor, given that Hawaii's economy is highly affected by tourism. Land leasing and
even owning being affordable would mean investors would plow enough capital into their
businesses and construct even diverse resorts and hotels. The flow of tourists would increase, but
on the other hand, there would be minimal revenue gained by the Hawaiian county officials.
Actions Recommended.
The Hawaiian county should come up with a strategy that would boost its income in
terms of revenues when the focus is aligned to property taxes. Instead of imposing tariffs on
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property alone, there should exist a criterion based on the use of land, and if or not it is a
commercial land or just a private one. For example, commercial land that is meant for business
purposes, to be a tourist accommodation center, should face slightly higher tax rates, as the land
is intended for commercial purposes. Unlike this example, land used for just normal activities or
non-commercial activities that are based on tourism should face fewer tax tariffs to help people
afford land. By investing in corporate countries that are tourism-based properties, there is a
likelihood of the funds to find its way back. Through tourism, hotels, vacation rooms, and resorts
are more than likely to return their invested money. Hawaii county should consider evaluating
the properties through this structure as it will not only maintain the revenue flow from tax-based
properties, but it would also encourage people to buy more pieces of land, regardless of the taxes
that are attached to them.
Impact on Decision Makers and Other Stakeholders.
As this new recommendation takes effect, it is evident that there would be a wave in the
Sea as not each person would be of the same idea. Decision-makers might face criticism. There
would be some probable hostility from some landowners, especially those in the tourism
industry. However, it would be fair enough since the blade will cut both sides. As they earn from
tourism based on prime lands, so should they pay tax accordingly. Stakeholders in the
implementation of the policy should also be in a position to find other channels of injecting
additional revenue emanating from tax. Through this, the economy will strike a balance in
ensuring that the city's income is at equilibrium and that the national kitty for tax revenue fosters
each department that brings some financial remuneration to the town. By doing so, there is a high
probability chance that Hawaii will be independent and manage the welfare of the people.
REAL ESTATE PROPERTY TAX DECREASE IN THE STATE OF HAWAII.
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References
Becker, R. K. (2016). Comprehensive Financial Report for the Fiscal Year Ended June 30, 2016.
The state of Hawaii, 14-16.
Hatry, H. P. (1971, June 2). Status of PPBS in Local and State Governments in the United States.
Policy Sciences, 177-189. Retrieved from https://www.jstor.org/stable/4531428
Krischke, G. (2019, June 19). New Hawaii Property Tax Rates 2019-2020. Retrieved from
Hawaii Living: https://www.hawaiiliving.com/blog/new-hawaii-property-tax-rates-20192020/
Mak, J. (2018). Lincoln Institute of Land Policy. Hawaii, 1-6.
Sally Kwak, J. M. (2011, January). Political Economy of Property Tax Reform: Hawaii's
Experiment with Split-Rate Property Taxation. The American Journal of Economics and
Sociology, 7(1), 4-29.
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