Boston City Council approved Mayor Michelle Wu’s commercial property tax proposal by a vote of 8-4 on Wednesday. The temporary measure would allow the city to raise commercial property tax rates to offset revenue loss to the city. It would need approval from state policymakers to go into effect.
Councilors Erin Murphy, Ed Flynn, Brian Worrell and John FitzGerald voted against the proposal. Councilor Julia Mejia voted present.
Murphy said the plan is a snub to Boston’s business community, with many business owners testifying before a council committee last week in fear that higher taxes would price them out.
“It sends the completely wrong message to businesses especially at a time when we want to be competitive,” Murphy said. “Raising taxes could be an efficient way to get companies to leave town.”
Commercial property tax revenue for the city is poised to fall in the coming years as the value of commercial real estate has dropped and more empty office buildings stand empty since the pandemic. Those taxes make up about a third of the city’s revenue.
Any fall would shift some of the financial burden onto residential property owners and raise their taxes so Boston can balance its budget. Wu’s plan is intended to provide a “softer landing” for homeowners by increasing the tax rate on residential properties over a five-year period and, in the meantime, taxing commercial property owners at a higher rate to help make up any shortfall. Municipalities are bound from changing those rates past a certain extent without approval from the state.
Those against the proposal pointed to the lack of job opportunities if businesses, especially mom-and-pop stores, leave the city or are forced to close altogether.
Councilor Gabriela “Gigi” Coletta Zapata, who presented the measure at the committee hearing, said she would be open to discussing an exemption for small businesses.
Councilor Sharon Durkan spoke in support of the proposal. She said she had been receiving daily emails from her constituents complaining about the increases in their property taxes.
“I don’t see how we can not consider sending this to the State House,” said Durkan. “If not, we’re going to get a lot more emails like this and we’re going to have a lot more people that cannot afford to live in the city and cannot afford to stay in their homes.”
In a statement following the council vote, Greg Vasil, CEO of the Greater Boston Real Estate Board, called the decision misguided.
“Instead of increasing the commercial property tax rate, city and state leaders must focus on boosting the region’s competitiveness and attracting businesses. We urge officials on Beacon Hill to reject this deeply flawed policy and focus on reforms that do not punish any one industry.”
The measure still needs sign-off from the state Legislature and Gov. Maura Healey before it can be implemented.
