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Pa. land tax change mulled

July 19, 2000

Pa. land tax change mulled



By DON AINES / Staff Writer, Chambersburg


CHAMBERSBURG, Pa. - Taxes on buildings would go way down, but the dirt beneath them would cost taxpayers more under a land value tax system recommended to the Chambersburg Borough Council Wednesday night.

"The whole idea of the program is to reward people who are building things," said R. Joshua Vincent, the executive director of the Center for the Study of Economics, a nonprofit organization in Columbia, Md. "The burden now is on people who have built homes and houses," he said.

Eighty-eight percent of the real estate tax revenues collected by the borough are on buildings, according to a study Vincent's group did last year. He said that encourages owners of vacant properties not to develop land until its value increases.

He said raising the price on raw land would make it more expensive to hold and encourage it to be developed for residential, commercial and industrial purposes. Vincent said there are about 460 vacant parcels in Chambersburg.

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The borough has real estate taxes totaling 30.5 mills, or $30.50 for every $1,000 of assessed value on a property. The center is recommending the borough adopt the land value tax, lowering rates on buildings to 18.3 mills and raising them on land to 119.3 mills.

In Pennsylvania, land is assessed separately from any buildings on it, so the suggested change would mean revenues would be split evenly between land and buildings. Vincent said the change would be "tax neutral" in terms of revenues and not violate the state mandated real estate tax cap for the borough.

For most owners of developed properties, Vincent said it would mean a tax break. The average residential borough tax bill would decrease from $183 to $175; the average for a commercial property would drop from $4,104 to $3115; and the tax on an average industrial property would fall from $3,900 to $3,306.

The average tax on a vacant lot, however, would jump from $37 to $144, Vincent said.

If the borough adopted the land-value tax, it should be put in place over a period of years, the study recommended.

Vincent said the system has been adopted by 19 cities and boroughs in Pennsylvania, including Harrisburg, Pa., and the Downtown Improvement District in Pittsburgh. The study said the number of vacant structures in Harrisburg decreased from 4,200 in 1982 to less than 500 now.

In addition to encouraging development of vacant land, Vincent said it prompts property owners to invest in existing buildings, because they won't be taxed so much for improvements. He said it could also reduce sprawl because it increases development in the borough where there are existing sewer, water and electrical utilities.

Vincent said the borough did not commission the study, but cooperated in compiling the information. He said the center is funded by grants, bequests and its own investment income.

Several council members asked questions about the proposal, but no action was taken at the workshop meeting.

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