State House impedes real estate ventures
by Nancy Cook Lauer
Stephens Media Capitol Bureau
nclauer@stephensmedia.com
Wednesday, March 7, 2007 8:51 AM HST
HONOLULU -- Two measures aimed at reining in real estate speculation by increasing taxes sailed through the House on Tuesday over the objections of free-market Republicans.Stephens Media Capitol Bureau
nclauer@stephensmedia.com
Wednesday, March 7, 2007 8:51 AM HST
The bills were two of several hundred bills passed by each house during long floor debates as the Legislature approaches the first cross-over on Thursday -- the approximate midpoint of the legislative session, when House and Senate bills are exchanged.
HB 1002 tacks a penalty on top of the regular capital gains tax that sellers now pay. The extra tax would be 60 percent for selling real property within six months, 30 percent for sales between six and 12 months and 15 percent between 12 and 24 months. Proceeds would go to the state's rental housing trust fund.
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The tax on properties valued at less than $600,000 would double from 15 cents to 30 cents per $100. The tax on properties valued between $600,000 and $1 million would increase from 25 cents to 40 cents per $100, and the tax on properties valued at more than $1 million would double from 35 cents to 70 cents per $100.
Both bills passed 39-9.
Rep. Maile Shimabukuro, D-Waianae, Makaha, Makua, chairwoman of the House Human Services and Housing Committee, said the bills are needed to curb "flipping" of land by mainland speculators who are driving property values up beyond the ability of local residents to pay. She said the rental housing trust fund has a balance of just $19 million, while the demand has topped $50 million.
"This bill simply gives people selling residential properties an incentive -- if you're going to choose between someone who's going to use this home as their home, or someone who's going to use this as a vacation home or second home, or investment property," Shimabukuro said. "Most of us in the state feel that given that choice, we really hope the sellers will choose the local working family that wants to make this place their home."
But Republicans, and a few Democrats as well, said they didn't think a tax increase is the way to go on either of the bills.
Opponents said many factors cause high real estate prices, including the law of supply and demand. Only 10 percent of Hawaii's land is available for residential development. The government's cumbersome permitting processes also contribute, as well as the high cost of building materials, they said.
"I simply believe this is a tax increase," said Rep. Kymberly Pine, R-Ewa Beach, Iroquois Point, Puuloa. "I hear a lot of comments about we're going to punish the Mainland people. But you know, local people buy houses too."
The measures now go to the Senate, which doesn't have similar bills pending. But Sen. Russell Kokubun, D-South Hilo, Puna, Ka'u, who chairs the Water, Land, Agriculture and Hawaiian Affairs Committee, which will likely hear the bills, said he's interested in learning more.
"I think there's always concern about speculation," Kokubun said. "But this is a free market. It's kind of hard to regulate it."
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Timkona wrote on Mar 7, 2007 12:03 PM: