The legislation, initially proposed by Boston Mayor Thomas M. Menino, applies to cities and towns that have different tax classifications for commercial and residential properties. Previously, state law dictated that the commercial rate could not be more than 175% of the residential rate. Under the new law, the rate will be allowed to go up to 200%. However, that figure will be reduced 7.5% every year for the next four years resulting in 170% rate as a maximum by 2009.
Boston and approximately 40 cities and towns across the state have reached the maximum rate and Menino, in his proposal to the legislature, had argued that city residents would face huge property tax increases if the state did not allow communities to tax businesses at higher levels. Boston has the most to gain from changes to the law as 70% of its property tax base is paid by commercial space.
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