Tax breaks stir controversy among business owners

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MESA, AZ (3TV/CBS 5) -

The Phoenix City Council recently voted to raise property taxes for the first time in 21 years, in an effort to round out the budget.

But some saw the move as an example of balancing city's books on the backs of small businesses while handing out big breaks for larger companies.

"It's amazing that they can get away with that," said Micky Hermes, the manager of the Auto Shop near downtown Phoenix.

More than half the money his shop makes goes toward his property tax bill, which he says equals about $5,400 a month, or more than $60,000 a year.

"That's a whole lot of batteries a whole lot of oil changes," he said.

While his crew is turning wrenches, many of the mid-rise and high-rise buildings near his shop pay no property tax or get a big break.

"How any elected official can justify that regardless of what their economic challenges are is beyond me," said Kevin McCarthy, president of the Arizona Tax Research Association.

[Graphic: Property tax breaks in Phoenix]

By his estimates, the city has taken more than $1.5 billion dollars off the property tax rolls over the years through what's called the Government Property Lease Excise Tax, or GPLET.

This is an economic incentive in which the city owns the actual property and leases it back to the business owner, enabling him or her to pay an excise tax that is lower the than the property tax rate.

It was envisioned as a way to spur growth and development in the once-sleepy downtown.

Some of the city's most visible buildings pay no property tax right now, while others get a big break.

Opponents say it's unfair to ask homeowners and small businesses to shoulder a larger property tax while letting high-rise developments and other projects off the hook.

But economic developers at the city say none of the progress downtown would be possible without the incentives the city is providing.

"We are now receiving calls from companies all across the country who are interested in being in downtown Phoenix," said Christine Mackay, director of the Community and Economic Development department.

There's no doubt the tax breaks have worked, but some small business owners question whether the cost is too high.

"It's kind of funny. A multi-billion dollar company doesn't have to pay. I guess it's kind of the world today the small guys the little guys have it tough and the bigger guys getting bigger," Hermes says.

Copyright 2016 KPHO/KTVK (KPHO Broadcasting Corporation). All rights reserved.


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Before making the move to television, Welch wrote and edited for the Arizona Guardian, a highly influential online news site dedicated to Arizona politics and government where he served as owner and editor. During his Guardian days, Welch was a frequent guest on “Politics Unplugged” and has been a regular fixture on the state political landscape since 2005 appearing on numerous radio and television talk shows. “I am thrilled to start working with such a talented and dedicated staff of journalists,” said Welch. “This is a great opportunity to broaden the reach of my political coverage and tell stories that affect Arizona voters and their families.” With more than 13 years of experience under his belt, Welch’s arrival only strengthens 3TV’s commitment to providing first-rate political and government coverage across all platforms. When not covering politics, Welch is an avid runner and fronts a punk rock band that plays frequently throughout the Southwest and California. Welch is a well-respected political expert in Arizona and his addition means 3TV will provide a stronger, more robust political presence in Arizona. He joins 3TV from the Arizona Guardian, a highly influential online news site dedicated to Arizona politics and government where he served as owner and editor. During his Guardian days, Welch was a frequent guest on “Politics Unplugged” and has been a regular fixture on the state political landscape since 2005 appearing on numerous radio and television talk shows. “I am thrilled to start working with such a talented and dedicated staff of journalists,” said Welch. “This is a great opportunity to broaden the reach of my political coverage and tell stories that affect Arizona voters and their families.” With more than 13 years of experience under his belt, Welch’s arrival only strengthens 3TV’s commitment to providing first-rate political and government coverage across all platforms. When not covering politics, Welch is an avid runner and fronts a punk rock band that plays frequently throughout the Southwest and California.

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