The Hawaii State Teacher’s Association has proposed a tax targeted on “wealthy investors” who own property in Hawaii as a means to retain teachers, raise their salaries, have smaller classroom sizes, and improve classroom conditions — all laudable goals.
Unfortunately, these so-called “wealthy investors” are not anonymous billionaires or “large corporations that are buying up all these properties and spending millions of dollars” as HSTA President Corey Rosenlee stated, rather they are persons at or near retirement age who have purchased rental property to supplement their otherwise fixed incomes.
These persons are your neighbors and parents who have chosen to invest in Hawaii instead of the stock market. In West Hawaii alone there are thousands of condos and homes that are used as rental units. Over 95 percent of these properties were purchased and owned by persons at or near the age of retirement. Many of them are owned by Hawaii residents and many more are owned by persons who live on the mainland USA or Canada. Many of these properties are listed on Vacation Rentals by Owners (VRBO) where potential visitors to Hawaii can view and book reservations for Hawaii vacations.
Typically, the VRBO users are looking for units that are more affordable than those who book at hotel rates. I am certain that most of the rental units on Oahu, Maui, and Kauai are also owned primarily by retirees — not wealthy large corporations.
After retiring from Kaiser Permanente in June 2016, we used our retirement savings and pension funds to purchase two condos in the Kolea complex located in Waikoloa Beach Resort. The prices on these units remain about 35-40 percent under the original selling price 10 years ago. Our property taxes currently for each of the two condos are just under $9,000 per year — a higher rate as they are not our primary residence. In addition, we pay Hawaii General Excise Tax (GET) and Transient Accommodations Tax (TAT) monthly, which has averaged about $1,200 per month per unit.
According to a recent article in the Star Advertiser, should this proposal go through, our property taxes will increase by $13,000 per year ($6,500 per condo) plus the Transient Accommodations Taxes will go up an additional $3,000 per year total. It is unreasonable to think that our prospective guests will be willing to pay far higher nightly rates to cover these increases. Most of the property owners we know do not make enough as it is to cover the cost of their taxes, home owner association fees, and mortgages.
We all want the best schools and teachers for Hawaii’s children. But this tax would be extremely unfair and would target a group that is not able to carry the burden. Additionally, it would target many persons who are not represented in the state of Hawaii — taxation without representation has long been frowned upon in our country!
Should this proposal by the HSTA go through, not only will our tourism industry take a hit, our property values will almost certainly fall as the owners try to unload these properties. Hawaii will become an extremely unpopular place to invest money in real estate!
Please write to your senator or representative to block this unfair tax!
David and Carole Kwiat are residents of Kailua-Kona