Who Pays Property Taxes?


Property taxes fall into three categories with varying degrees of assessment: residential, vacant land and commercial. For businesses, there is also personal property tax.

Property taxes fund various governmental functions. In Payson for example, Gila County, the Town of Payson, Payson Schools, Gila Community College, the Library District, Fire Districts, Sanitation District and other governmental agencies share your property taxes.

As a percentage of value, residential property owners pay the least amount of tax. They are assessed at 10 percent of the value the property. Vacant land is assessed at 16 percent and commercial is at 23 percent of value.

What this means is that if a residential property and a commercial property have an equal value, the owner of the commercial property will pay 2.3 times as much as the residential property owner.

It is easy to understand why most towns and cities vie for commercial business. They carry an inordinate share of the property tax burden, which in turn, helps to keep property taxes lower for the homeowner.

To give you an idea of the benefits that commercial entities bring to our community, I checked the public record to see how much Wal-Mart and Home Depot contribute to our community. Wal-Mart pays more than $180,000 in property taxes per year. Home Depot contributes more than $120,000 a year in taxes. Without these entities, our residential tax assessments would almost certainly be higher and we would have farther to travel for goods we need.

In addition, every small business property owner pays the higher 2.3 multiple rate. Commercial entities also generate sales and personal property tax.

Cities in the Valley often compete for commercial projects. In recent years, there has been strong competition for commercial projects between Scottsdale and Phoenix and also between Mesa and Tempe. The cities have been known to offer developers incentives to locate in their city limits by giving up short-term revenues for long-term gains. The papers may report and citizens may think this is a windfall for the developers, but in reality, it is a win-win situation. The developer gets the incentive to build the project and the municipality and its citizens reap long-term tax income which funds schools and government.

To keep the Rim Country viable, it is important that we have an adequate mix of commercial entities in our communities. Empty storefronts are a drain on everyone's wallet.

Ray Pugel is the designated broker for Coldwell Banker Bishop Realty. For more information, call (928) 474-2216.

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