Give them a break! Tax bill offers relief to small businesses

Author: Maria Diaz

On Dec. 22 Mayor Bill de Blasio signed into effect a law that will help nearly 3,000 Manhattan small businesses save an average of $13,000 in annual taxes.

On Nov. 30, the mayor gathered at City Hall with the bill’s two primary sponsors, City Councilmembers Dan Garodnick and Helen Rosenthal, and Manhattan Borough President Gale Brewer to celebrate the passage of Gardonick’s bill that reforms the Commercial Rent Tax.

The C.R.T. was created in 1963 as a revenue generator for the city. Initially, the tax applied citywide. Businesses paying more than $250,000 in annual rent were assessed a 3.9 percent levy on that amount. In the 1990s, however, the tax was restricted to Manhattan businesses below 96th St.

The last time this tax had seen reform was in 2001, Garodnick said, when the “average ground-floor commercial rent in the heart of Soho was $175 per square foot. Today, that rent is more like $755 per square foot. That’s an increase of 431 percent.”

The councilmember added, “You know what hasn’t changed — commercial rent tax. It has been stuck. Every year of inaction by the city has basically been a tax hike on small businesses that were never meant to be affected by this tax in the first place.”

Under the revision of the C.R.T., the city is doubling the threshold of the tax to $500,000, which, Garodnick noted, “will deliver relief to nearly 3,000 Manhattan businesses.”

He said that, of those 3,000 businesses, about 1,800, making less than $5 million in annual revenue and paying less than $500,000 in annual rent, will no longer be liable for any C.R.T. In addition, another 900 businesses, making up to $10 million in annual revenue and paying up to $550,000 per year in rent, will pay a reduced tax, based on a sliding scale. The tax relief will come in the form of an offsetting credit against the C.R.T. liability, according to a release from Garodnick’s office.

Businesses that pay more than $550,000 in rent would not receive any credit.

The credit is available Jan. 1, 2018.

Both Garodnick and de Blasio said the bill was specifically targeted only to help small businesses.

Natasha Amott, owner of a kitchen-supply store, Whisk, at 933 Broadway, between E. 21st and E. 22nd Sts., didn’t even know this tax existed when she opened her store in 2012.

“It was only in the beginning of 2015 that I received notification from the city that not only did I have to start paying the tax immediately, but that I also had to pay the other years, with interest,” she said at the press conference.

Since then, Amott said, she has paid tens of thousands of dollars to the city in taxes.

“My frustration led to questioning those in the government about the fairness of the tax,” she said.

Working with the City Council, local politicians and other local business owners, Amott said she finally felt heard.

“Not having to pay this annual tax,” she said, “means that each year I can consider making needed updates in my stores, upgrades to my Web site, and pay increases to my staff.”

“The small businesses that are going to benefit will save on average $13,000,” de Blasio said. “For a long time, this was the city of small business. If you had a great idea, you could thrive. We need New York City to be the best place for small businesses in this country.”

Rosenthal said every day she hears from Upper West Side constituents concerned about local businesses.

“Bringing nearly a billion dollars, we have treated for far too long the tax collected from these businesses as an ATM for the rest of the city,” Rosenthal said. “But let’s be clear, the cost of this tax is felt citywide. These businesses employ residents from throughout the five boroughs. So, when Manhattan small businesses close, all New Yorkers lose.”

The mayor discussed the significance of small businesses, which not only serve local neighborhoods, but also give communities character and bring them together. De Blasio said that everyone has seen shops leave at an alarming rate, replaced by empty storefronts or major corporate chains like Starbucks and CVS.

“Anyone with eyes understands,” he said, “that there is a crisis with our mom-and-pop stores.”

While this bill is a step in the right direction, it’s just a first step in solving the retail crisis, de Blasio explained.

“Consumers have a role to play here, too,” he said. “Buy local. It makes a big difference. If you love a store, patronize it. Don’t talk about patronizing it, actually patronize it. They cannot pay the bills with your good intentions.”