Rejecting a last-ditch plea by business spokesmen, the District of Columbia City Council's committee on finance and revenue approved yesterday a tax rate on homes that would be 18 percent lower than the rate on commercial property.
If enacted - as expected - by the full council next Tuesday, the real estate tax on residential property would be $1.54 for each $100 of assessed value. The rate on commercial property, including apartment buildings, would be $1.83 for each $100 of value.
Currently, all property in the city is taxed at the same rate, $1.83.
The switch to a dual tax structure has not yet been formally authorized by law. The council is scheduled to enact the authorization Tuesday before setting the rates that were recommended yesterday.
For the owner of a home that was assessed at $50,000 last year, which increased in value at the citywide rate rise of 19.7 percent, the actual tax reduction in dollars would be slight.
Last year's tax bill, based on a $50,000 value minus a $6,000 homeowner's exemption, would have been $805. This year's bill, based on $59,850 value, minus a homeowner's exemption increased to $9,000, would be $798.
The council also is considering increased "circuit breaker" credits on income taxes for homeowners and renters in the lower- and middle-income brackets, increasing their tax savings.
The $1.54 and $1.83 rates were recommended by both Mayor Walter E. Washington and the council committee chairman, Marion Barry (D-AtLarge), who are rivals in the current mayoral campaign.
Before approving the new rates, the committee heard critical testimony from spokesman for two heavily affected business groups.
John T. O'Neill, executive vice president of the Apartment and Office Building Association, voiced fear that the council may widen the gap between the two tax rates next year. He predicted the new tax system would slow economic growth.
John Schwieters, cochairman of the Metropolitan Washington Board of Trade's fiscal affairs committee, called the dual rates "a dangerous distortion of the tax system" and urged other forms of tax credits for lower-income homeowners. He called for a $1.71 tax rate on all property.
The only other witness, Joel D. Joseph, a candidate for the Democratic nomination for the Ward 3 council seat, called for a limit on property tax assessment increases.
The committee also approved a resolution by Barry calling on Congress to double the annual federal [WORD ILLEGIBLE] to the city, currently authorized at $300 million. Mayor Washington, in a statement, praised the action.