Kauai Mayor Bryan Baptiste announced yesterday a proposal to change the real property tax rates so that resident homeowners would benefit at the expense of resorts and vacation rentals.

A bill, sent to the County Council yesterday and based on a 2004 proposal, would not only transfer the tax burden onto resorts, hotels and vacation rentals, but lower taxes for resident homeowners by about a third, said Eric Knutzen, projects manager for the county Finance Department.

“We’re trying to achieve a fairer distribution of taxes,” Baptiste said yesterday at a news conference to announce the bill. “It’s innovative.”

The bill would change the tax rates on buildings and land. Currently, the average rate on land is about equal to the rate on buildings.

But the bill would make the tax rate on buildings three times the rate for land.

By putting the burden of the tax on the buildings, people in modest homes would pay much less than those in more expensive homes, Knutzen said.

The changes would also keep property taxes more insulated from the explosion in land values, which have risen exponentially with the home market in the past 10 years. Some residents have seen their property tax bills double and triple as their neighbors’ homes have been sold and resold.

“If someone puts a $7 million home next door, it doesn’t have that same spiking effect that people experienced over the past three, four years,” Baptiste added.

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(Source: Tom Finnegan, Honolulu Star-Bulletin)