Business divided on tax proposal

Providence business and nonprofit leaders are divided over a recent advisory-panel proposal to significantly lower the city’s commercial property tax rates while demanding bigger contributions from local colleges and hospitals. More

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Business divided on tax proposal

Posted 1/23/12

Providence business and nonprofit leaders are divided over a recent advisory-panel proposal to significantly lower the city’s commercial property tax rates while demanding bigger contributions from local colleges and hospitals.

Designed to solve what it describes as an “out of balance” tax system that hampers growth, the volunteer Commission on Revenue, Sustainability and Efficiency’s recommendations have been embraced by many companies and those involved in commercial real estate.

But in a sign of how complicated a job reforming the city tax code is, the Greater Providence Chamber of Commerce is split on the proposals.

The business group, of which city colleges and hospitals are members, supports the commercial property tax reforms, but opposes proposals to seek more revenue from the major nonprofits and a suggested hike in the local meals tax.

“On the tax-classification front, the commission did an excellent job stepping back and thinking about how the tax code might be structured to make Providence more competitive and business friendly,” said Chamber President Laurie White.

However, on seeking larger contributions from nonprofits, “we have been opposed to any move in that direction,” White said. “The colleges, universities and hospitals provide the foundation for the region’s economic recovery.”

She added that the local restaurant industry is concerned a proposed 1 to 2 percent increase in the local meals tax would make it less competitive.

Other business groups, including business-backed The Providence Foundation, are more enthusiastic about the commission report.

“They have documented well the need to have a more competitive tax structure,” said foundation Executive Director Daniel Baudouin.

In the 37-page report, the volunteer panel charged last spring with studying the city’s revenue structure recommended simplifying the tax code by scaling back the large 50 percent exemptions for owner-occupied residences while reducing rates across the board.

Ultimately, the panel recommends pegging the commercial rate at twice the residential rate and tangible rate, for business equipment, at three times the residential rate. The residential rate would drop to account for the Homestead-exemption reduction by the amount needed to hold homeowners harmless.

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