SPOKANE, Wash. — The Spokane City Council is looking to spur growth in the community by exploring moving away from property taxes and adopting a land value tax model instead.
Right now, if someone living in Spokane wanted to make improvements to their home, it would increase their property taxes.
“if a developer comes in and fixes up a vacant property or if a homeowner even remodels their house, they’re actually penalized for that because it increases the total value of their property,” Spokane County Assessor Tom Konis said.
Vacant lots can decrease property value in a neighborhood and, in some cases, can even be a nuisance to neighbors.
“What land value tax would do is kind of even out the property taxes that different lots pay and make it so that we’re not incentivizing vacant lots and not punishing investment,” said City Councilmember Kitty Klitzke.
By taxing land value, taxes would increase for vacant lots and parking lots and would decrease for places such as the Davenport Hotel. This in turn would hopefully spur more growth since growth would be incentivized.
While this might sound great in theory, the Spokane County assessor foresees possible obstacles.
“It really goes against state law as it’s currently written,” Konis said. “Not that that couldn’t be changed, but as it is currently written, we have article seven of our state constitution that says all properties that are similar to each other are to be created and taxed equally.”
When asked if the city would be collecting less in taxes through this model, Konis said from his understanding, no.
“We would be raising the levy rates to collect the same amount of money to start with,” Konis said.
That means, to start, properties like the Davenport might not see much of a difference in what they pay in taxes.
Overtime, if this did spur growth, levies would be divided amongst more people. In turn, the levy rate would decrease.
City Council is currently working on getting legislation approved so it can launch a pilot program to try out the Land Value Tax model. A special taxing district would be created for a certain area of the city so officials could test the tax model out and see if it makes a difference.
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