The Preliminary Report of the Real Property Tax Advisory Commission for the City and County of Honolulu has recommended a complete repeal of the property tax exemption for credit unions.
The Commission estimated that the tax benefit to credit unions operating in the City and County of Honolulu from the exemption was $1,473,000.
The Commission noted that it heard from credit unions imploring the Commission not to repeal the current exemption. Some credit unions justified not repealing the exemption because they provided "financial services to their memberships which normally cannot be accessed at traditional financial institutions."
Other credit unions claimed that the exemption allowed them "to enhance the earnings of their members and reduce the cost of loans made to their members." In other words, real property taxpayers are being asked to subsidize credit unions members.
The Commission believes that all real property owners who benefit from County services should pay something for those services. Therefore, credit unions real property should be subject to the property tax based on an assessment ratio of the fair market value of the credit union’s real property.
Comments on the Report are being accepted through January 9.
Read the Report.
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The problem with all exemptions is that those who do not receive subsidize those who do. This is true not only for Credit Unions but for all the religious organizations that pay no taxes but nevertheless receive services. We should eliminate all of these exemptions since they are all inherently unfair to those who do not get them
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