Panel opposes tax overhaul
New London - After months of research and reviewing four possible models, a committee formed to look at implementing a land-value tax in the city has recommended staying with the status quo.
In a split vote, the Land Value Tax Committee decided not to participate in a state-funded pilot program that would allow a municipality to base its property tax system on land rather than buildings.
The City Council has scheduled a hearing for 6 p.m. Monday at City Hall for the public to comment on the committee's findings.
The council will meet at a later date to take action on the recommendation.
A minority report from the committee recommends the implementation of a pilot program in a portion of the city.
It also recommends a program to educate the public on the impact of land-value taxation on taxpayers.
But the final report of the majority of the committee determined that "the city has too many unique parcels and businesses to benefit from any impact that LVT may have."
Under the current system, owners of vacant land are penalized for developing the land because new buildings mean more taxes.
But the committee found that the top 25 properties whose taxes would increase under a land-based tax system are already being maximally utilized. Examples were car dealerships, large apartment buildings and shopping centers.
In theory, reducing the tax on improvements to building creates a greater incentive to build, or sell to someone else who will.
Developers would use higher-quality materials, which in the long run could help the city avoid blight and revitalize economically depressed areas.