Providence Business Property Taxes Worst in the State
Thursday, July 26, 2012
State law imposes a cap on how large the gap can be between the commercial and residential rates, but it makes an exception for two communities—Providence and Glocester (which does not use the exception).
In Providence, the exception hurts the economic development efforts, said Gary Sasse, a former Director of the state Department of Administration and current fiscal adviser to the city council. “Providence’s commercial rate puts it at an economic disadvantage,” Sasse told GoLocalProv.
Under the law, most other communities cannot have commercial tax rates that are 50 percent higher than the residential rates. Other cities and towns also have to use their local homestead rate in making that calculation. In other words, if a homestead exemption makes the residential rate effectively $15, the commercial rate cannot be higher than $22.50 per $1,000 in valuation.
Business leader: ‘Disappointed’ in high commercial tax burden
Laurie White, president of the Greater Providence Chamber of Commerce, agreed that the imbalance in tax rates is a problem the city’s economy.
She added: “Nevertheless we were disappointed that more was not done to address Providence's high commercial tax burden in the 2012 budget. However, we look forward to working with the revenue commission that was created to suggest reform to the city’s tax structure in order to make it more balanced and competitive.”
State law grants the exceptions to both Providence as well as Glocester, but only Providence is using the exception on the homestead exemption. Glocester is not using the exception because it does not have a homestead exemption (according to the Economic Development Corporation.)
Gap between commercial and residential rates grows
In Providence, the gap between the commercial and residential rates will grow slightly wider under the new budget. The commercial rate will be $36.75 per $1,000 while the residential rate is $31.89. But with one of the most generous homestead exemptions in the state—as high as 50 percent of value—some homes in Providence effectively have a tax rate of $15.94. (The previous rates were $33.70 for commercial and $30.38 for residential. Click here to view 2010 tax rates for all cities and towns.)
If Providence did not have an exception under state law, its commercial rate could be only $23.91. Instead, thanks to that exception, the commercial rate is 230 percent greater than the homestead tax rate, a difference of more than $10 in the rate.
The exception dates back to at least 2006, but likely many years before that. Yesterday, questions as to why the exception was created in the first place were referred to Susanne Greschner, the Chief of the state Division of Municipal Finance, who did not respond to a GoLocalProv query in time for publication.
Meanwhile, at the local level, the city has formed a Revenue Review Commission to examine such issues, Sasse said. He said the city’s first priority this year was to minimize any additional tax burden. Now that the budget has been passed for the new fiscal year, he said the city can turn to the long-term task of restructuring its tax rates.
“The Taveras administration has worked since taking office to save Providence from financial collapse and put the city back on firm financial ground,” added city spokesman David Ortiz. “This is the foundation we'll build upon to support business, create jobs and grow our economy.”
If you valued this article, please LIKE GoLocalProv.com on Facebook by clicking HERE.
- As Tax Credit Expires, Housing Prices Fall
- Business Groups Say Chafee Taxes a Job-Killer
- Chafee Defends Obama on Tax Cuts
- Chafee’s Budget: A Taxing Attack on the Middle Class
- EXCLUSIVE: New Law On Taxes – Who Wins?
- Avedisian Proposes Tax Hikes for Warwick
- Campaign Update - Democratic Party Calls on King to Pay Back Taxes to Florida
- Chafee Is ‘Apocalypse Now’ for Taxpayers
- City Budget Seeks To “Broaden Tax Base”
- ‘Taxes Chafee’ Signs Littered Around the State
- BREAKING NEWS: Newspapers Lead Uprising Against Chafee Tax Plan
- Candidate: Raising Taxes Is Not an Option
- Chafee Not Backing Down on Sales Tax Proposal
- City Budget: Tax Bills Could Go Out This Week
- A LIVELY EXPERIMENT April 14, 2011 Taxes and Pension Costs
- BREAKING NEWS: State Approves $1.6M Tax Break for Hasbro
- Candidates Shocked Schilling Could Get Tax Credit Too
- Chafee Tax Critics Don’t Have Realistic Alternatives
- City Council Candidate Owes At Least $19,000 in Back Taxes
- A LIVELY EXPERIMENT April 14, 2011 The Governor’s Budget and Proposed Sales Tax
- BREAKING NEWS: Taveras Proposes Tax Increases
- Candidates Split Over Taxes at Chamber of Commerce Forum
- Chafee’s Budget: $176 Million in Tax Increases
- A LIVELY EXPERIMENT Tax Burden
- BREAKING NEWS: Vast Majority of RI Opposes Some Chafee Taxes
- Car Tax Dodgers—Providence Plans Crackdown
- Corporate Trickery: Rep Claims Big Businesses Dodge State Taxes
- Bill to Prevent Lost Revenue from Tax Credits
- Borders Closing: Why We Need the Amazon Tax
- Chafee: Caprio Never Met a Tax He Didn’t Like
- EXCLUSIVE: Caprio Supports Renewing Bush Tax Cuts
- Are you angry yet? Tax silly season at the State House
- Bills Would Increase Accountability for Tax Credits
- Chafee Benefits from Tax Breaks on RI Properties
- Chafee: More Unpaid Taxes?
- EXCLUSIVE: Hidden Tax Cut in State Budget—$70 Million