Hawaii Cattlemen's Council
Property
Tax Issues – By Jim Greenwell
Farmers
and ranchers on both Oahu and the Big Island
are wrestling with existing and proposed
legislation that represents a major economic
threat to the State’s livestock and
grazing industry.
The
basic question as to how to assess and tax
our ag lands requires us to make a
fundamental philosophical decision and then
stick with it.
The key premise is whether we are
going to recognize and respect real property
(land and improvements) which is in
legitimate agricultural use as being a
factor of agricultural production and assess
it at its value for the commodity it
produces? Alternatively, are we going to
treat it as a developable investment asset
and assess it at its fair market real estate
value or some fraction thereof?
The
Hawaii Cattlemen’s Council (HCC) fully
acknowledges that assessing based on fair
market values and comparable sales, while in
itself complicated, is far easier than
having to wrestle with the very complex
question of establishing fair ag use
production values for each commodity, but
there is absolutely no linkage or rationale
connecting the two approaches.
If agriculture in Hawaii is to
survive much less thrive, the ag
productivity valuation approach must be the
one and the only basis for assessing all
real property that is in legitimate
agricultural use.
While
there definitely is a place for rural
residential and so-called “gentlemen
ranchettes”, we need to distinguish those
from legitimate or commercial ag.
This requires a good yardstick and
maybe the $2,000/year in ag income now being
proposed on the Big Island is a reasonable
one We feel, however, that small ranches and
subsistence producers who may otherwise not
qualify under this yardstick for the
ag production benefits should be allowed to
include in that figure the value of
livestock slaughtered or produce consumed
for “home use”.
While
the use of ag productivity values must be
preserved, we recognize that these values
may deserve periodic review and possible
adjustment. We suggest that this may best be
handled on a statewide basis,
commodity-by-commodity, through an entity
well equipped with the resources and
expertise for the task, perhaps through
CTAHR or DOA.
The
cattle business is like no other and the
range of production value per acre is both
very low and very wide. For instance, a
recent HCC study concluded that the
potential gross revenue per acre from a beef
cattle operation could ranged from a high of
$226.80 per acre to a low of $1.17 per acre.
Another
issue being debated on the Big Island and
elsewhere concerns the tax treatment of home
sites on ag land. HCC believes that
dwellings on land in ag use including the
sites of those dwellings which are occupied
by people who work on that farm or ranch,
whether the home is provided free or at some
reduced rent, are legitimate factors of
production and just as integral a part of
that ag operation as are any other lands or
structures (be those pasture lands, a work
shed, garage, water tank etc.). Accordingly,
HCC feels that ag homesites should not be
singled out or treated any differently than
any other land or improvement which are a
factor of that farm’s or ranch’s
production.
Finally,
HCC supports a fair and equitable ag
dedication program and favors an approach
now being considered by Hawaii County where
roll-back taxes are adjusted based on the
length of compliance actually achieved. HCC
also supports enabling pasture lessees with
recorded leases of five or more years to
dedicate such land for the remaining term of
their lease without jeopardy to the
interests of the Lessor.
More on
Current Property Tax Issues:
Discussion
on Revenue per Acre - Download
Table on
Revenue from Production of Calves- Download
Oahu Property Tax Article
- Aug 2004 - by Alan Gottlieb - Download
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