City Council considers measure that would create a progressive residential property tax

Kenna StormoGipson at the Hawaiʻi Budget & Policy Center said the tiers would allow the city more flexibility to adjust property tax rates.

“There’s agreement that it would be really tough and maybe counterproductive if you were to raise the property tax on current owner­-occupants, who live and work here and are in their home,” she said.

“However, increasingly, our housing market is becoming a market of investment properties, nonowner-occupied properties.”

The Hawaiʻi Budget & Policy Center is collecting data on home sales across the state. While the data has yet to be collected for Honolulu, the trends on Kauaʻi and Maui show an increase in nonowner-occupied homes.

For example, in 2010, 49 percent of homes sales on Maui were owner-occupied, and 51 percent were investment properties. In 2020, only 30 percent of home sales on Maui were owner-occupied while 70 percent were investment properties. The trend is similar on Kauaʻi.

StormoGipson explained that the funds that the city could collect from these new tiers could go to city services or fund affordable housing.

“What’s going to have the bigger public good?' she asked. 'The public good of allowing very high income earners with second homes in Hawaiʻi to maintain the lowest property tax rate in the country? That’s hard to argue—a public good of that versus being able to fund say, affordable housing.”