Changes include adding an income threshold to ensure help reaches those who need it most
Mayor Bill de Blasio, Speaker Melissa Mark-Viverito and Council Member Dan Garodnick today announced a new bill that would make changes to the Commercial Rent Tax (CRT) aimed at helping New York City’s small businesses succeed. Effective July 1, 2018, the threshold for Manhattan’s CRT for businesses with income up to $5 million will increase from $250,000 to $500,000 annual rent, with the benefit provided on a sliding scale for businesses with income between $5 million and $10 million or paying $500,000 to $550,000 in rent. In total, the move reduces taxes for 2,700 small businesses, including 1,800 that will no longer pay the tax at all. Under this move, the average business owner will receive between $11,300 and $13,000 in annual tax relief. This represents the first change to the CRT since 2001 and specifically targets Manhattan’s mom-and-pop shops and small businesses with 99 percent of the benefit going to businesses with only one or two taxable locations. The bill was voted on earlier in the day by the City Council and will be signed by the mayor in the coming weeks.
“Small businesses are the lifeblood of this city,” said Mayor de Blasio. “That’s why we designed the bill to ensure that they’re the ones we’re helping. The Commercial Rent Tax in its previous form is outdated and we’re proud to make the first changes in over a decade to bring relief to thousands of small businesses.”
“Manhattan’s small business owners have had to make too many sacrifices just to keep their livelihoods open. Intro 799-B would alleviate the financial burden of having to pay a rent tax on top of having to pay the rent itself for the borough’s businesses. Despite vast changes in the Manhattan real estate market and economic landscape over the last 15 years, the commercial rent tax has not been updated to reflect the realities on the ground. So this legislation reflects a long overdue step to provide relief to those businesses who have been struggling for far too long,” said Speaker Melissa Mark-Viverito. “I thank my colleague, Economic Development Chair Daniel Garodnick, for his leadership on this issue and advocating for our small businesses.”
“With storefront vacancies soaring and retail in crisis, the City Council is today taking a crucial step to support Manhattan’s small businesses,” said Council Member Dan Garodnick. “For the first time since 2001, we are reforming the unfair, commercial rent tax. By doing so, we are throwing a lifeline to businesses that make our neighborhoods special and provide jobs to New Yorkers from all five boroughs. This relief could not come soon enough and I join the 41 other co-sponsors of this legislation in thanking Mayor de Blasio and Speaker Mark-Viverito for their support.”
Currently, the CRT is paid by commercial tenants below 96th Street and above Murray Street in Manhattan who pay $250,000 or more in annual rent. The effective tax rate is 3.9 percent and has, for years, imposed an additional operating expense on small businesses, regardless of their income. For some small businesses, what they have owed in CRT has at times amounted to more than their net annual income, putting a serious strain on their finances. This change in tax policy is an effort to alleviate that strain and help New York City’s small businesses thrive. The total cost to the City is $36.8 million in Fiscal Year 2019.
EDITOR'S NOTE:
I left in the comment from Manhattan Councilman Garodnick, and left out the other comments from other Manhattan connected business affiliates or elected officials, since this is for Manhattan only and not the other four boroughs known as the 'Outer Boroughs'. Good going Mayor de Blasio and Speaker Mark-Vivirito. No wonder this city has gone downhill the last four years. At least one of you will be gone soon.
