City Councilman Keith Powers today announced new legislation that would eliminate the commercial rent tax for small businesses south of 96th Street and provide immediate economic relief for small mom-and-pop businesses that were already encountering high costs pre-COVID 19.
According to the councilman, the commercial rent tax is an effective rate of 3.9 percent of businesses’ annual rent charged only to businesses south of 96th Street in Manhattan. This bill would help approximately 5,500 Manhattan businesses with an annual base rent of less than $1 million that are currently paying the tax.
“This is money back in the hands of small business owners,” said City Council Member Keith Powers. “Right now, New York City is experiencing a state of emergency and our response to help businesses recover must be commensurate. Relieving payment of the commercial rent tax at this time is a tangible benefit for businesses.”
In addition to the legislation, the councilman also released a report, Open For Business, Saving our small businesses post-COVID, that explains, among other things, the additional steps the city can take to improve small businesses’ economic outlook.
Some immediate steps that the city can take, in addition to the commercial rent tax freeze, is providing financial assistance, removing regulatory hurdles, expanding existing programs such as eviction moratoriums and extending targeted employment assistance to undocumented New Yorkers.
The report also highlights the economic turmoil that has engulfed New York City since March when the lockdown began.
According to a Hospitality Alliance survey, only 19 percent of New York City businesses paid June rent and only 26 percent of landlords waived any rent. In addition, 53.7 percent of businesses in the New York City region reported having “large negative effects” in relation to COVID-19, and since June 2019, New York State has lost 510,900 jobs in leisure and hospitality alone.
The councilman’s bill is also co-sponsored by Council Member Margaret S. Chin and Manhattan Borough President.
"The commercial rent tax has historically penalized mom and pops south of 96th Street just for occupying a brick-and-mortar space. For the small businesses desperately fighting to secure any form of financial relief they can to make it out of this crisis in one piece, the urgency to re-evaluate this tax has never been more dire,” said City Council Member Margaret S. Chin.
“The COVID pandemic has devastated small businesses in our city, and without relief far too many will fail,” began the Borough President.
“The Commercial Rent Tax is one place where the City can provide that relief, and this bill will do exactly that: zero out the CRT for businesses with less than $1 million per year in rent until the state of emergency is over."
In response, a mayoral spokesperson said the city is currently reviewing the legislation.
“Our small businesses are the core of New York City’s economy and our neighborhoods, which is why we have done everything possible to support them through these difficult months. We are reviewing the legislation and will work with the Council to support our small businesses, but remain concerned about the impact this could have on the City’s revenue," said Julia Arredondo, Deputy Press Secretary, Office of the Mayor.