December 10, 2018

Dual-tax rate hurts Worcester

Alex Guardiola

Every fall, the Worcester City Council debates the city's tax rates, and the last three years have increasingly pushed the burden onto commercial and industrial property owners. The Worcester Regional Chamber of Commerce continues to argue reducing the gap between commercial and industrial tax rates and residential tax rates will lead to a better tax system in the city. Moreover, it will continue to grow the commercial/industrial workforce and tax base.

Since 1984, the city council has shifted a portion of the residential tax burden over to the business property tax payers. By doing so, it puts Worcester at a competitive disadvantage to its surrounding communities. Worcester is one the few Massachusetts communities using a dual-tax rate system.

The Town of Auburn joined other surrounding communities in their dedication to narrowing the tax rate on Nov. 13. Auburn followed suit from Fitchburg, a Gateway City like Worcester, which on Oct. 25 continued its push toward a single-tax rate. Webster, on Nov. 19, voted unanimously and eliminated the dual-tax rate and went to a single-tax rate.

This leaves Worcester as the only local community who, instead of narrowing the tax gap, has increased it the past three years. As we continue to see surrounding towns and cities help their businesses grow by moving to have both the businesses and residents shoulder the tax burden equally, Worcester has unfairly voted to increase the burden on businesses since 2015. This is bad economic development policy in a time when the city is seeing a resurgence of companies interested in making Worcester their future business home.

This inequitable tax policy puts Worcester businesses at a disadvantage especially when Auburn, Webster and Fitchburg all just voted to narrow their tax rate gap. In particular, it adversely impacts the manufacturing sector and companies with lots of inventory. It is important to remember these businesses pay twice, once on their commercial property and then again on their personal property (equipment and machinery).

With the new regulations coming from the state's Grand Bargain signed over the summer, businesses are bracing for the minimum wage increase from $11 to $15 per hour over the next few years. Residents have argued they need a discounted tax rate to live in the city. Ironically this discounted rate for residential taxpayers has caused an erosion the commercial/industrial tax base, shifting part of the tax levy back onto the homeowners. Undoubtedly, a combination of both the wage increase and a failure to narrow the tax gap will ultimately result in businesses who don't have a need for a Worcester address moving to neighboring towns.

Last year's vote to narrow of the dual-tax gap was defeated 6-4. The six councillors who voted against narrowing the gap were Moe Bergman, Khrystian King, Konnie Lukes, Candy Mero-Carlson, Gary Rosen and George Russell. Let them know they should change their minds.

Alex Guardiola is the director of government affairs and public policy for the Worcester Regional Chamber of Commerce.


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