Big victory for the tax collectors, loss for ratepayers

The city of Boston won a big tax case against National Grid this past week. Look for cities and towns to get aggressive on how they assess rights of way and real property for utility companies.

Boston has won a $16 million tax fight with National Grid, a victory in a long-running case that could embolden cities and towns across Massachusetts to raise taxes on the utility as many communities face financial distress.

The Massachusetts Appellate Tax Board ruled Wednesday that Boston has the right to assess National Grid’s gas pipes and other property at its current market value, instead of what it was worth when first purchased, as the utility had argued. The difference is projected to produce $3.3 million in additional tax receipts for Boston this fiscal year.

If the city had lost the case, it would have been required to refund $16 million, the cumulative amount under dispute since another gas company now owned by National Grid appealed its tax bill in summer 2004.

Since most Massachusetts communities tax utilities at the lower value advocated by National Grid, the tax board’s ruling should allow them to assess the utility’s property at the higher market rate, potentially yielding millions more in annual tax receipts. While state officials were unable to estimate the broader impact of the ruling, they pointed out that utilities such as National Grid are typically among the largest property taxpayers in a community.

Municipal officials took note of the decision yesterday and promised to reevaluate their assessing practices. “It sounds like a revolution to me,” said Barry Cooperstein, a city assessor in Taunton and an official with the statewide tax assessors association. “Obviously we’ll be relooking at everything along those lines.”

The big loser in all this will be ratepayers who will foot the bill as utilities and cable companies pass on the costs. Cases like these are the result of poor corporate tax policies in the Commonwealth which tax utilities and telecomm companies differently (if at all) than other business entities. Even if the cities are correct in pushing for the higher assessments, they are sending the wrong signals to companies that might to invest in Masachusetts.

About Karl Marx

Left wing libertarian conservative.