The District of Columbia Council is considering cutting tax bills almost in half for commercial property owners east of the Anacostia River.
A bill under Council review proposes taxing commercial properties in Ward 7 and Ward 8 at the same rate as residential properties. This is a policy effort to spur economic development.
Former Mayor, now Councilman Vincent Gray explained that the District wide tax rate creates a significant impediment to attracting businesses to neighborhoods that are geographically separated by a river from Downtown's Central Business District of Washington D.C.
The East End Commercial Real Property Tax Rate Reduction Act of 2017 (B22-0043) lowers the tax rate for Class 2 properties from $1.65
This basically cuts each business' annual real property tax payment in half. The bill then gradually increases the Class 2 rate after the initial 10 years by 4 cents per year until it is equal to the general Class 2 rate. Assuming the Class 2 rate does not change during the term of this legislation, the full tax reduction period (10 years) and adjustment period back to the current tax rates (20-25 years) will take 30 to 35 years.
Sponsors of the bill believe the tax rate cut will produce results right away.
"Upon approval, this legislation will spark an immediate surge of new economic development and job creation for the neighborhoods on the East End of the District of Columbia. New businesses will move to the East End of the city and existing businesses will have more money to hire new workers, raise wages, or to re-invest in the business," Gray told the Washington Business Journal.
The bill was referred to the Committee on Finance and Revenue.