Government officials have reportedly given Volkswagen of Chattanooga a mind-boggling and generous incentives package, so much so it does not even have to pay school property taxes.
This, according to Helen Burns Sharp, founder of the Chattanooga-based Accountability for Taxpayer Money.
According to ATM’s website, members of the group want local elected officials to reform the current system for granting property tax breaks.
“Did you know that Volkswagen does not pay its school property taxes in full because of a sweetheart arrangement whereby its storm water fee is paid from those school taxes?” Sharp asked in a column published in The Chattanooga Times Free Press.
Sharp called the Volkswagen package “overly generous.”
“Land, site preparation and cash grants of more than $50 million are part of the deal, in addition to a tax break agreement that lasts a very long time (until 2040.) Last year alone, our local governments abated $17.5 million in property taxes. VW will not pay any taxes to support police, fire, streets, parks, etc. until 2040,” Sharp wrote.
“By 2040, the total amount of VW tax incentives the city and county will have granted could approach $500 million in lost property tax revenue. The state also provided major incentives, but their subsidies are primarily structured as reimbursements for performance. Many of us have been under the impression that Volkswagen pays its school property taxes in full. That has been the unwritten policy for companies under tax break agreements approved since 2008.”
According to Sharp, the original Volkswagen agreement said the company would pay 29 percent of what would have been payable if the property were subject to property taxes. That percentage, she added, represented the educational portion of property taxes.
“However, Accountability for Taxpayer Money recently discovered that there is also a provision in the original VW agreement that says the company shall not be responsible for any storm water fees: Any storm water fees assessed shall be credited against any in-lieu payments,” Sharp wrote.
“Because all of its in-lieu payments go for education, this annual storm water fee is now subtracted from the taxes they pay to schools. Last year, the amount deducted from its school tax bill of $5,560,667 was $644,000. If this practice continues until 2040, the school system wouldn’t receive about $19 million.”
Sharp said she knows of no other tax break agreement that says the storm water fee may be paid from in-lieu-of-taxes.
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