TAKOMA PARK — The inventory tax could be abolished in Takoma Park to make the south county municipality a more attractive place for businesses.
“We have found, over the years, that we have a real hodgepodge of businesses paying this tax including the city has received tax from entities right outside the line but have a mailing address that says Takoma Park,” said City Manager Suzanne Ludlow. “We have a number of businesses in Takoma Park that have never paid or probably aren’t paying the right amount.”
Alternatively known as the personal property tax, it requires businesses in the city to pay a certain amount based on the full value of their physical assets including goods and furnishings.
Ludlow explained the inventory tax, which is also charged at the county level, remains largely unenforced in the city. She added that many businesses find it difficult to pay due to its confusing nature and complicated paperwork.
“There have been a number of requests by the Council to seriously look that this issue and perhaps come up with a better system,” Ludlow added.
In the Council meeting Wednesday, Ludlow explained that alternatives included exempting a certain percentage of a business inventory and raising the commercial property tax.
Ludlow explained that eliminating the inventory tax would have a moderate financial impact on the city budget and a slight income increase for businesses. She added businesses with little inventory would also see a small tax increase.
Council member Jarrett Smith (Ward 5) explained he was concerned that eliminating the inventory tax would not benefit the city’s economy.
“I don’t want us to say ‘hey we’re going to give you all this money’ and it doesn’t translate into anything that would potentially help the city,” he said.
“It’s a larger question of how we, as a city, see out commercial space, and how we want to grow,” said Council member Talisha Searcy (Ward 6). “
Searcy added that she was in support of eliminating the tax but did not want the city falling into a deficit.
Council member Kacy Kostuik (Ward 3) echoed Searcy’s comments to abolish the inventory tax but added it was important to replace it with another revenue source.
Council member Terry Seamens (Ward 4) and Mayor Kate Stewart also expressed support for eliminating the inventory tax.
“The system is unfair, burdensome and unpredictable, everything that we don’t like in government,” Stewart said.
The City Council yet to determine when to hold additional discussions and opportunities for public comments.