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For all the local talk about the need to attract and hold job-creating businesses, many local governments are allowing their property-tax rates to reflect a growing bias against commercial property.

It creates an anti-business perception that can only hurt this area in the long run. While politicians routinely point to the need for more jobs, tax rates in some places are openly unfair to the businesses that would provide them.

The issue is the two-tier tax system that towns and cities can adopt, if they wish, in conjunction with a property revaluation. The property tax burden is split into two pieces, one to be paid by the homestead class (one-, two- and three-family houses) and the other by the non-homestead class (apartments and businesses). Commonly, at the beginning, tax rates for businesses are higher than tax rates for homes, but the greater problem is the tendency for the system's workings to widen the gap, to wrongly increase the disparity.

Two examples are afforded by the North Tonawanda and the Kenmore-Town of Tonawanda school systems, where tax rates for 1998-99 were recently determined.

In North Tonawanda, where the non-homestead rate was already 45 percent higher than the homestead rate, the homestead rate was increased by 53 cents per $1,000 of assessed valuation while the non-homestead rate went up $2.88. The gap gets worse.

In Ken-Ton, the non-homestead rate was already 54 per cent higher. But the gap widens because homestead properties get a decrease of $1.10 for each $1,000 of assessed valuation in 1998-99 while the non-homestead rate goes up $2.53.

The workings of the system are complex, but city and town governments are permitted under state law to make certain adjustments in the shares paid by each class so they can actively force the gap to narrow. School systems are bound by whatever municipal governments decide to do, but they should play a role in advocating a narrowing.

Surely, the two examples cited here should be warning flags for the North Tonawanda and Town of Tonawanda municipal governments to begin to use the state law to reduce unfairness to business. Actually, they would not be pioneers.

Lackawanna has the biggest gap of all, but adjustments made by the city government in the spring produced a narrowing. The trend carries over to school taxes. For 1998-99, school tax rates for both classes have been decreased, but the non-homestead decrease is bigger. Buffalo City Hall also used the law to narrow the spread this year.

Generally speaking, the two-tier system was adopted in places where there are older residential communities and a historic -- but not necessarily continuing -- concentration of business and industry. It hasn't been used in the fast-growing suburbs.

Oddly, that means that the two-tier taxes have come into use in just the places that need to hold and increase job opportunities. While the two-tier system nicely cushions homeowners from a big tax-bill jump in connection with a revaluation, it's long term consequences to a community present economic dangers and potential job loss.

Instead of watching the gap widen, cities and towns should make judicious use of the law to begin narrowing it.

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