Framingham Considers Small Biz Tax Break
Officials in Framingham are exploring the institution of a little-used property tax break for small businesses in town.
Almost 20 years ago, the state Legislature authorized a measure that allows communities to offer a tax break to small businesses. Since then, only 11 communities, including a few in the MetroWest region, have adopted the provision.
The tax break gives a 10-percent discount on property taxes to businesses that employ less than 10 people and are in a building with an assessed value of less than $1 million.
Bellingham, Westford, Wrentham and Auburn have already instituted the tax break and Framingham's Board of Selectmen could make a decision about adopting the measure in the coming months.
‘It's Complicated'
Officials in the town of Bellingham instituted the provision - Massachusetts General Laws Chapter 59 Section 51 - about 10 years ago when the town went from a single tax rate to a dual tax rate.
Under the split rate system, commercial and industrial property owners pay a different property tax rate than residents. As a way to compensate for the shift, Bellingham approved the measure, giving a break to small businesses.
Last year, 97 businesses in the community received the 10-percent break on property taxes. The year before, 93 businesses qualified, according to Elizabeth Cournoyer, principal assessor in Bellingham.
Cournoyer said it's been a fine program, but she understands why so few communities have adopted the measure: It can be an onerous process to administer.
The state sends each community a list of businesses in that city or town with fewer than 10 employees on average during the last calendar year, as determined by unemployment insurance receipts the state collects.
Once that list is developed, it must be cross-referenced against the assessor's records to determine if the business is in a location that is worth less than $1 million.
Another stipulation for qualification is that if the business is in a multi-tenant space, such as a strip mall, all businesses in the space must qualify for the exemption in order for the property owner to receive the tax break.
"It could be rather difficult to enforce in a large community," Cournoyer said.
Officials in Framingham are studying how complicated the process would be and exactly how many businesses would qualify.
Based on preliminary estimates from that state-provided list, there could be more than 700 businesses in the town that qualify for the exemption, according to Daniel Dargon, Framingham's assessor.
Each of those businesses would have to be cross-referenced to determine the assessed value of their business location and to ensure any other tenants in the building also qualify. Dargon said he's not sure how many businesses would eventually be eligible for the break.
There's also another wrinkle.
While the tax break is given to small businesses, it's technically at the cost of larger businesses in the community. The tax revenue that is not paid by small businesses is still collected by the town, it's just made up for by an increased rate for larger businesses, but not residents.
So, in effect, the break for small businesses is subsidized by the larger businesses in town.
Dennis Giombetti, chairman of the Framingham Board of Selectmen, said all the factors are being considered.
"I'd like to see some more information on it," he said. "We need to get some facts around it. But it's certainly piqued our curiosity."
Another curious thing, Giombetti said, is how few communities have adopted the provision. Even though it's been around since 1993 and amended twice since then, only 11 communities have instituted the measure. That could just be because it hasn't been publicized much. Giombetti said he had never heard of it until Dargon, the town assessor, brought it to the board's attention.
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