Government Affairs REPORT

In Planning and Development Committee:
CBIA opposes tax-rate proposal

(Feb. 17, 2006) CBIA testified before the Planning and Development Committee this week against a section of HB-5038 that would allow several cities in the state to implement different tax rates for certain kinds of real estate.

The bill would allow municipalities of 80,000 or more residents to set a higher tax rate for vacant urban properties, many of which are likely brownfield sites — that is, contaminated properties requiring extensive cleanup before they can be restored to productive use.

By raising the tax rate for those properties, lawmakers believe they would force the owners to take action on the sites, presumably by developing them.

However, the proposal creates a new problem and avoids a better remedy.
Allowing separate tax classifications could open the door to more government tinkering.

If a new classification is established, there may be pressure to look for more new “classifications” – thus creating unequal tax burdens on different kinds of property owners.

What’s more, there is a better way to develop urban brownfields sites. Legislators could make it easier and more feasible for developers to tackle the very expensive cleanup of these contaminated properties.

It’s important that the state not penalize an innocent landowner of
contaminated property because of the prohibitive cost of cleanup — the situation shouldn’t be worsened by increasing their taxes.

Proponents say that land-value taxation has worked in some Pennsylvania municipalities. But there is no great evidence of that success, and some of those municipalities have abandoned the practice.

With no compelling reason for such a system in Connecticut or certainty that it would work here, lawmakers should move slowly and carefully on a proposal of such import.

CBIA believes lawmakers should first study of the pros and cons of this particular tax system to determine if it is right for Connecticut. For more information, contact CBIA’s Bonnie Stewart at stewartb@cbia.com or 860-244-1900.n