City businesses react to tax hike

Date: 12/30/2008

By G. Michael Dobbs

Managing Editor



SPRINGFIELD Since the Finance Control Board (FCB) approved the new tax rate that was proposed by Mayor Domenic Sarno and OK'd by the City Council, Russell Denver has had more than 100 phone calls and e-mails from businesses protesting the new rates.

The action taken by the city government now gives Springfield the most expensive business tax rate in the Commonwealth.

Denver, the president of the Affiliated Chambers of Commerce of Greater Springfield, had fought against the new rates that put more of the tax burden on businesses than residences. His organization had suggested a rate that would have placed an equal increase on both tax classifications.

Now instead of trying to attract new businesses to the city, Denver said his emphasis would be to retain the businesses now here.

He told Reminder Publications that he wasn't surprised by the FCB's actions. At the meeting on Dec. 18, there was little discussion on the tax rate after a brief presentation and only James Morton voted against the approval.

Denver said that the way the taxes are now structured, businesses are subsidizing every residential property by about $700.

The result, he added, is a tax increase on everyone as businesses "pass it along to all consumers."

The conventional political wisdom is the City Council historically puts the burden on businesses so at election time voters can't complain about their rising taxes. Denver pointed out that residential taxes have risen but that "not one City Councilor has ever been voted out of office despite raising taxes."

Denver said the rise in business' taxes started in the 1980s when the city was first confronted by the cap on property taxes caused by Proposition 2 1/2 and city businesses said that they could take on a greater percentage of the overall taxes. At that time commercial properties made up about 40 percent of the city's values. Now he said it is far less.

With neighboring cities offering lower tax rates, Denver said that it's logical for retailers in Indian Orchard, for example, who have much of their business from Ludlow, consider moving there as Ludlow has a rate of $17 compared to Springfield's $36.98. He said that businesses on Boston Road might be considering moving farther down that thoroughfare to Wilbraham where the rate is lower and Forest Park shops could be attracted to East Longmeadow.

Although Denver acknowledged the support Gov. Deval Patrick has given to Western Massachusetts, he explained that increases such as this one don't help companies compete against other states, much less on the global market.