In a momentous week, the North Central Massachusetts Chamber of Commerce was on hand to testify before elected officials in Clinton and Fitchburg this week as the two communities reviewed their tax shifts for the year. In a major win for local business, Fitchburg councilors elected to move to a single rate, eliminating what remained of a six point shift! A night later, Clinton’s selectmen voted unanimously to move to a 1.52 tax shift, narrowing their split by two points and committing to moving towards a single rate over time.
Massachusetts allows two models for property taxes: single and dual rates. The single rate means that both residential and commercial/industrial properties are taxed at the same level. Meanwhile, a dual rate system dictates that commercial and industrial property taxpayers shoulder more of the burden and pays a higher share of taxes based on a property’s assessed value. A dual tax system increases costs for businesses, disincentivizes business investment and puts a community at a competitive disadvantage compared with neighboring communities that maintain a single rate.
“Your decision to gradually move towards a single tax rate is the right decision long term for the City” stated Roy Nascimento, President & CEO of the Chamber during the Fitchburg’s City Council tax hearing. “Making the commercial tax burden more competitive will position Fitchburg to attract new business investment, retain existing businesses, increase tax revenues and change outdated perceptions that the City is unfriendly to business.”
Tax shifts became a common tool to alleviate the tax burden on residents- at the expense of businesses- in the 1980s. Since then, many communities have come to recognize that imposing a split tax rate places them at a competitive disadvantage, incentivizing businesses to locate in other communities with more equitable tax policies. For that reason, only a handful of communities within the region still maintain a tax split. In smaller communities, where a greater share of real estate is zoned as residential, a tax shift is particularly frustrating as the share of the levy is transferred over to a smaller collection of stakeholders. As such, a 1.50 shift can sometimes increase a commercial ratepayers bill by as much as double in absolute terms.
This week’s votes are significant as the tax shift is perhaps the most immediate and direct manner in which municipal officials can impact businesses within their communities. “We recognize that tax rates are only one factor in an economy – energy costs, workforce, health care costs, and many other things also play a role”, Nascimento stated while speaking before Clinton’s Selectmen. “But there is nothing you can do about health care costs, energy costs, and so on. Adopting a more competitive tax rate and working towards a single rate is something that you can do something about.”
The Chamber applauds the actions of the Fitchburg City Council and the Clinton Board of Selectmen. The adoption of the single tax rate passed by an 8-2 margin at the Tuesday, December 3, 2019 Fitchburg City Council meeting with Councilors Marcus DiNatale; E. Thomas Donnelly; Marisa Fleming; Amy Green; Joel
R. Kaddy; Michael Kushmerek; Elizabeth Walsh; and Anthony Zarrella voting in favor and Councilors Samantha Squailia and Paul Beauchemin voting against. The reduction in the property tax shift from 154% to 152% passed unanimously at the Wednesday, December 4, 2019 Board of Selectmen meeting with select board members William F. Connolly, Jr.; Sean J. Kerrigan; Edward J. Devault; Michael J. Dziokonski; and John J. Boisoneau all voting to adopt the reduction.
