With small businesses across the city closed or on the brink of failure, a Manhattan lawmaker introduced a bill Tuesday to give some in his borough a break.
The legislation from City Council member Keith Powers would temporarily repeal the commercial rent tax for businesses for the remainder of the Covid-19 state of emergency. The 3.9 percent tax is imposed on base rent for commercial properties south of 96th Street in Manhattan. The bill would affect about 5,500 businesses with an annual base rent of less than $1 million.
“This is money back in the hands of small business owners,” Powers said in a press release. “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.”
But it would also hurt city tax revenues, which is why lawmakers have struggled to eliminate the unpopular tax despite decades of trying. They have managed to reduce its scope, but that was when the city was flush, not when it was cutting programs to balance the budget as it did last month.
Small businesses have been struggling as well, however. A NYC Hospitality Alliance survey of 509 restaurants, bars, nightclubs and event venues found that four out of five respondents did not pay full June rent and 36 percent paid no rent at all.
Many businesses have been unable to come to an agreement with their landlord for relief. Nearly 27 percent of landlords have waived rent for tenants in the trade group’s survey, with the majority waiving less than half of rent. Only 10 percent of landlords and tenants have renegotiated their leases given the pandemic, according to the survey.
“The commercial rent tax has historically penalized mom-and-pops south of 96th Street just for occupying a brick-and-mortar space,” City Council member Margaret Chin said in a press release. “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.”
The city has recently passed other temporary relief to assist small businesses. However, some measures have faced scrutiny from landlords, including one that critics say favors major retail chains over small property owners.
Contact Sasha Jones at sasha.jones@therealdeal.com