The Maui News - Changes made to the circuit breaker property tax program earlier this year meant to stop wealthy property owners from abusing the tax credit and "cheating the system" will also have severe, unintended consequences for longtime homeowners and kapuna, residents said at a Maui County Council meeting last week.
"We acknowledge that we should all be deeply concerned about those individuals who threaten to cheat the benefits from the taxpayers and they should be ferreted out, but we condemn the callous gutting of the circuit breaker tax credit," William Tavares, co-chairman of the Committee for More Equitable Taxation, said in public testimony. "It's denying hundreds of people from benefitting from the credit in these frightening economic times."
The circuit breaker program was first implemented to help those with limited incomes, longtime residents and kupuna from being taxed out of their homes due to escalating market values of properties, Tavares said.
However, because wealthier residents, many of whom lived at least part-time on the Mainland, also were applying and qualifying for the circuit breaker tax credit, Council Budget and Finance Committee Chairman Mike White drafted a bill in August 2012 that revised the way adjusted gross income would be determined.
The measure initially passed through the council unanimously, but Mayor Alan Arakawa vetoed it. He said he understood the bill's intent but was concerned about the "unintended consequences" on low-income and elderly residents.
The County Council overrode the mayor's veto in May.
Council Chairwoman Gladys Baisa said she did not anticipate such a community backlash when the measure was first approved this spring, but she is willing to take another look at the bill. She said that for now, the matter has been referred to the council's Budget and Finance Committee, and it is up to the committee's chairman to schedule a hearing.
The new, "very strict" requirements have led to fewer applications so far.
Residents have until Dec. 31 to apply for the tax break.