Lets subtract the add-on tax


City Council is mulling another new tax increase in addition to the proposed seven cents per $100 hike for both residential and commercial real estate already under consideration. This new add-on tax of three cents on commercial real estate, which has been proposed by the city managers office, would go to fund Alexandria transportation projects. Its an idea that should be shelved.

A tax rate hike of more than 11 percent on business owners, many of whom are struggling in a down economy, is a particularly noxious notion. Yet thats exactly what the add-on tax combined with the proposed rate increase would do: Take the rate on commercial property from 90.3 cents to 100.3 cents per $100 of assessed value.

Whats the harm in a mere dime increase? For a struggling small business owner who happens to be fortunate enough to own their building, it could mean an additional several thousand dollars per year in new taxes. If a building has an assessed value of $1 million, that dime increase would mean paying an extra $1,000 in taxes; if it has a value of $2 million, it would mean paying $2,000 more and so forth. Even if assessments are down and not all are the average commercial property owner will see an increase in their tax bill under this proposal.

Further, one of the key justifications of why this new tax on businesses was needed in the first place to fund the debt on an $8.5 million Potomac Yard exclusive transit way was rendered moot when the city learned that it could use stimulus money to pay for this project. At this point, rather than backing off an increased burden on local businesses, city staff recommended other spending projects.

Fortunately, it appears that there is a consensus on City Council that this is not the time to pass a new tax on local businesses. Instead, it appears this topic will be considered this fall as part of larger deliberations about Alexandrias transportation issues. That seems a reasonable course of action: City Council should deal with the current budget shortfall independently from considering a potential new tax for transportation projects. 

In this space over the past few months we have discussed numerous spending proposals in the Fiscal Year 2011 city budget, including turf for a soccer field, environmentally friendly trolleys and additional EMT personnel. Clearly, there are many worthy, competing initiatives that it would be nice to fund. But in the current budget deficit situation, that will not be possible. Public safety should take precedence among competing spending goals everything else should be prioritized behind that.

As budget planners rank spending priorities they will eventually reach the bottom rungs on the ladder. Surely there are areas, programs and departments in the city government structure that have outlived their initial purpose, or are simply not as important as other priorities, and could be expunged. Elimination of programs should wherever possible be accompanied by cutting the jobs of city employees who were manning them.

Perhaps it sounds harsh to advocate for city workers to lose their jobs, particularly in a recession. But thats exactly the burden that excessive taxation places on the business community. Many local restaurants, gift shops and service providers have either closed their doors or laid off employees during this recession. 

A job lost in the private sector is no less precious than a job lost in the public sector. Yet public sector spending and taxing directly impacts private sector jobs. Only after an exhaustive review of city spending has both taken place and been clearly communicated to Alexandria residents, should additional taxes, particularly on our local business community, be considered.