Letters to the Editor: Add-on Tax a Detriment to Our Economic Growth

The Alexandria City Council held a budget work session recently to discuss the potential implementation of an additional real estate tax for the 2,700 commercial properties in Alexandria to fund local transportation projects.

The proposal would result in the average commercial property paying an additional $6,000 a year in taxes if the maximum additional tax of 12.5 cents per $100 of assessed value was levied. The maximum tax increase would cost businesses over $12 million in the next year. 

The question facing the City Council is should the tax be implemented and what projects need to be funded at this time.

After the budget hearing, it became very clear to me that there are not any urgent projects at present that need to be funded with local money (Note:  West End BRAC projects will be funded with Federal and State money). One of the lead projects on the list is to spend $21 million over the next two years for an entrance on the north side of the Eisenhower Avenue Metro station, currently the entrance is only on the southside. This is a far cry from an urgent project.

Last month, the council learned of an unused $11.5 million available from state urban funds - monies that could be used immediately for local transportation projects.  This is roughly equal to the amount the new tax would generate this year. 

In this most challenging economy of our lifetime, where we have seen the worst job losses in 70 years, now is not the time to increase the tax burden, on anyone. The financial tsunami of the past few years has touched the lives of every American.

The commercial vacancy rate is improving in Alexandria but is still over 10%.  An additional tax on commercial properties will result in higher vacancies due to the fact that many leases have the taxes and insurance passed on to many cash-strapped tenants.  Job losses will result when business are faced with the mandate of higher taxes or the option of keeping an employee.

Alexandria’s business community is unique and is comprised of many small businesses.  Eighty percent of the businesses have fewer than 20 employees.  Our city needs to promote an environment where businesses can flourish.  It is up to the Council to put the correct policies in place that will promote entrepreneurship and make Alexandria a desirable locality for business to locate.  Other jurisdictions in our region have implemented this onerous Add-On tax, but rather than copying them, we should use this instead as a recruitment advantage        

A positive budget proposal on the table is to reduce the business taxes for companies that gross less than $750,000.  This would generate savings of $1.6 million for over 2,000 of our businesses and free up capital that owners can reinvest in their enterprises.   

Profitable businesses contribute to the health and vibrancy of our community and help take the financial burden off of homeowners.

The budget public hearing is on March 7 at 4 p.m. at City Hall. This is an opportunity for the City Council to hear your thoughts on all budget-related matters.

As for the Add-on tax, I think reasonable minds can appreciate that folks can continue to cross Eisenhower Avenue to ride the metro as opposed to our business community being additionally taxed to fund this project and others like it.

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