Impact Tax - Tonight

The much deferred debate over Impact Taxes is once again on the city council agenda tonight. In short, the proposed ordinance O-09-69 would temporarily drop impact taxes on so called "green path" development and reduce them by 50% for all other development.

The arguments against the moratorium generally take one or both of the following two paths:

1. Lowering impact fees would lead to a loss of tax revenue.
2. The cost of extending city services to undeveloped areas (i.e. Westside businesses and neighborhoods) should be borne by those who directly benefit from those services.

The first argument is really a non-issue. The reality is when there's no development, there's no revenue from the impact tax. Worse, there's no potential revenue generation from the taxes that would be paid if the empty lot had a commercial or residential revenue generator (development) in place.

More insidious is taking the point of view of government itself and viewing taxes as belonging to the government. Taxes and the government belong to the people not the bureaucrats and politicians that spend our hard-earned wealth. Remember, developers don't pay taxes - consumers do.

The second argument is a little harder to knock down. Not because it's in any way more substantial, but because it appeals a core value that individuals should pay their own way. If you build a home or a place for your business to operate, you should bear the brunt of the costs of the infrastructure required to develop that facility.

The problem is that developers and property owners were already paying for that infrastructure through utility expansion charges and unpredictable exactions. That's why groups like NAIOP supported the institution of impact fees. What they got was system of Impact Taxes in addition to all of the other fees and Impact Taxes were designed not to offset the cost of infrastructure extension but to achieve the infill objectives of New Urbanists.

Of course, the inequitable system of taxes known as "impact fees" only pushed those looking for their affordable piece of paradise out of the city and into surrounding communities creating more sprawl, more pollution, and less tax revenue for the City of Albuquerque. But impact fee proponents don't really care about the actual impact of their policies they simply want to control development with an iron fist - control that all of us pay for. Sounds a lot like the proposed government controlled health care scheme doesn't it?

* Main Entry: com·mu·ni·ty
* Pronunciation: \kə-ˈmyü-nə-tē\
* Function: noun
* Inflected Form(s): plural com·mu·ni·ties
* Usage: often attributive
* Etymology: Middle English comunete, from Anglo-French communité, from Latin communitat-, communitas, from communis
* Date: 14th century

1 : a unified body of individuals: as a : state, commonwealth b : the people with common interests living in a particular area; broadly : the area itself c : an interacting population of various kinds of individuals (as species) in a common location d : a group of people with a common characteristic or interest living together within a larger society e : a group linked by a common policy f : a body of persons or nations having a common history or common social, economic, and political interests g : a body of persons of common and especially professional interests scattered through a larger society

- Merriam-Webster Dictionary

You'll notice that community is a group of people with common interests living in a particular area. Those interests include things like security, fire protection, sanitation, roads, and basic infrastructure. To be a part of that community, its members agree to pay reasonable taxes to the community's governing body in order to pay for the infrastructure required to provide those services.

The idea that one part of the community should pay more for the same infrastructure provided to another part of the community is simply wrong - fiscally and morally. Moreover, it fractures the tax base. The "pay your own way" argument simply won't work as there's not a neighborhood in town that could afford to pay for its own infrastructure and maintenance.

The best kind of taxation is broad and shallow. Impact Taxes as implemented by the City of Albuquerque back in 2005 are neither. Reducing impact fees is a step in the right direction even if the reduction is less than equitable because of the "green path" provision.

In the long run, the City of Albuquerque needs to readdress its system of Impact Taxes, exactions and other fees in order to make them equitable and predictable. Fair, equitable, and low taxation leads to individual economic prosperity. Tonight, the council has an opportunity to take a step towards a stronger local economy. The question is whether or not they will have the courage to do so.