Menino Local Option/Tax Cut: Permanent, or temporary?
Friday, March 2, 2007
Before seeing the
details of the Menino proposal to cut Boston property taxes by
the revenue collected from the new meals tax and
telecommunication taxes, CLT would alert you to the following:
Any community can collect less
in property taxes than Prop 2½ allows.
But that amount accrues, and can be fully assessed later.
Without supporting local option
meals taxes or a telecommunications tax, we’d point out that there is
one technically legitimate way that Boston property taxes could be cut
by the amount of the new proposed taxing powers.
The money would have to be permanently removed from the
Proposition 2½ allowed revenues.
The first year, property tax
bills could be printed as planned, with a line at the end subtracting
the "new local option tax bonus":
an actual, bottom line tax cut.
Next, the Prop 2½ allowed levy
would be permanently reset at the new, lower amount, so that next year’s
allowed increase would be built on that lower amount.
And each year, if more revenues than expected come in from the
new local option taxes and telecommunication tax, the City of Boston
should cut the property tax again with another line at the bottom of the
bills, and another permanent reduction in the property tax base.
There are other, not so
legitimate ways the property tax cut could happen:
1. The city could still
levy the total amount that Prop 2½ allows, the annual 2½ percent
increase, but give the local option bonus only to residential property,
shifting it onto the commercial/industrial base, or;
2. The city could cut
property taxes the first year, i.e., not levy the total Prop 2½ allowed
amount the first year, but accrue it on paper and then raise it later.
So we need to know if this is a
one-time or temporary tax cut that homeowners will have to make up
later, after the local option taxes are securely in place, or if it is a
permanent decrease in the amount to be levied by the city.
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