The R.I. Public Expenditure Council on June 27 released a report that outlined inequities in the state’s property tax system, with businesses often shouldering too much of the load.
The report, “Shifting Burdens: An Updated Analysis of Rhode Island’s Property Tax System,” says the property tax regime has “fallen victim to considerable distortion.”
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The report found that the historic increase in residential property values over the past few years “has led to an acceleration of inequities” that has “exacerbated obstacles to growing the economy and making housing more affordable.”
Property taxes comprise on average 19% of mortgage-holding homeowners’ monthly housing costs. And the burden on businesses makes up close to 40% of all state and local taxes paid by businesses.
The commercial property rate is 49.5% higher than the rate applied to residential property, on average. However, the rapid growth in statewide residential real estate values – increasing 23.3% between 2022 and 2024 alone – has led to a reduction in the residential property tax rate relative to commercial or tangible property, with 14 cities and towns exceeding the statewide percentage.
Johnston, for example, has decreased its residential rate by 34.2%, while reducing its commercial rate by a mere 3.2%.
A study by the Lincoln Institute of Land Policy of the largest city in each state found in fiscal 2023 that Providence had the third-highest effective tax rate on commercial property, after Chicago and Detroit.
