By Nickolai Sukharev @Nickolaiss
TAKOMA PARK — Eight months after voting to eliminate the personal property tax, otherwise known as the inventory tax, the Takoma Park City Council is reviewing ways to make up for the lost revenue.
“In this past year, the Council removed the inventory tax portion of the personal property tax [and] we feel that was a good move for competitiveness of Takoma Park businesses,” said City Manager Suzanne Ludlow. “At the time that the Council made that decision, there was … a commitment to looking at ways to fill that [gap] and to explore a commercial real property tax.”
Though the elimination of the inventory tax goes into effect on July 1, 2019, Ludlow explained that the city would lose approximately $320,000 in yearly tax revenue as a result of the change.
During the Dec. 5 meeting, the City Council discussed adjusting the real property tax to make up for the lost revenue.
While state law delegates the property tax to counties, municipalities are also allowed to create subcategories within the property tax based on the usage of the building or property.
Ludlow outlined four potential options for the City Council to consider.
The first includes levying a commercial tax as identified by the Maryland Department of Assessment and Taxation on all properties being used for commercial purposes while the second involves creating a subcategory for retail uses.
A third option would involve the city increasing the rate used to calculate real property taxes for all properties regardless of classification.
The fourth option assesses property taxes based on the assessed value of the property, similar to the system used in Washington, D.C.
Other options include levying taxes on the Washington Adventist Hospital and the John Nevins Andrews School properties once they are vacated, creating a special tax district, or re-implement a business licensing program, which expired in 2007.
Council member Cindy Dyballa (Ward 2) asked if the city could implement a tax-credit system based on the occupancy of the building.
Ludlow explained that tax credits are “sometimes hard to figure out” based on ownership or co-ownership changes.
“I think there’s plenty for us to consider when it comes to credits [and] when it comes to other kinds of special programs,” Ludlow added. “As we look at that, [it’s] making sure that it’s actually feasible to figure out.”
Dan Robinson, a local business owner and former City Council member, expressed concern that an additional property tax on commercial buildings would “target small businesses.”
Robinson also urged the Council to eliminate the property fixture tax, adding that his tenant, who sells music recording services, “needs his equipment like a dentist needs his chair.”
The Council will tentatively discuss additional options in January.