This double tax exists in Manhattan below 96th Street and only one other location in the country – the State of Florida.

Reform legislation written by Council Members Garodnick and Rosenthal would raise the minimum rent at which small businesses are forced to pay Commercial Rent Tax from $250,000 to $500,000.

Legislation would bring relief to over 3,400 – or 40% of -- businesses that pay the tax, while only impacting 6% of the revenue it brings in.

Garodnick/Rosenthal bill has 35 co-sponsors, a super-majority of the NYC Council.

April 27, 2017– Today, small business owners stood outside of WhiskFlatiron to detail the heavy burden the Commercial Rent Tax (CRT) imposes on their small businesses. Elected officials and industry leaders joined them and urged Mayor de Blasio to support Council Member Garodnick and Council Member Helen Rosenthal’s bill (Int. 799A), which would reform CRT -- a 1960s-era tax that has been eliminated everywhere else across New York City, except for Manhattan below 96th Street.

"New York City is stepping on the neck of our small businesses through this unfair and antiquated tax, and they need relief this year,” said Council Member Dan Garodnick. “With this bill, we will deliver relief to more than 3,400 businesses who will have more money to expand, hire, and keep their doors open. We will continue to push this issue until we get results. 35 Council Members are supporting this effort and it's time for the Mayor to join our efforts."

 “NYC is facing a crisis in retail and my business, Whisk, is feeling it. Whisk is facing a Commercial Rent Tax bill for over $15,000 this year. This is on top of corporate taxes we already pay. The CRT diminishes entrepreneurial efforts and hurts wages. Instead of paying this additional tax to the City I should be putting it in the pockets of my staff. We should not be hurting retail businesses like Whisk that try hard to support NYC residents with quality retail employment. The Mayor agrees that small businesses are vital to our neighborhoods and that the City needs a public policy response to the challenges facing small businesses. Supporting CRT reform should be an easy policy choice for the Mayor and the City Council,” said Natasha Amott, owner of Whisk, a kitchenware shop in Flatiron.

“The retail environment is the most challenging I have experienced in the past 50 years. The CRT tax on our rent adds to our already heavy financial burden,” said Howard Partman, owner of San Francisco Clothing, an Upper East Side business for the past fifty years.

Currently, CRT applies to all businesses paying over $250,000 a year in rent, and is a 3.9 percent surcharge on their base rent, paid to the city.  This $250,000 threshold has not been adjusted since 2001. The proposal would remove that tax entirely for businesses paying less than $500,000 in rent, and provide a credit to businesses with rents between $500,000 and $550,000. Analyses have determined that more than 3,400 businesses would see relief as a result of this policy change.

This policy, with support from 35 City Council members representing all five boroughs, was included in the NYC Council’s FY2018 Preliminary Budget response. When Mayor de Blasio released his Executive Budget on April 26, 2017, he did not include any of the Council’s proposed CRT reforms.

"The Commercial Rent Tax is a serious burden for small businesses in the heart of Manhattan.  Although it most directly impacts neighborhoods like mine on the Upper West Side, its negative consequences affect all New Yorkers, as the middle-class jobs small businesses provide help the entire city the middle class jobs they provide help the entire city prosper.  It is essential that we work to foster entrepreneurship in Manhattan, and I look forward to working with Council Member Garodnick and our allies to ensure that our small businesses are protected," said Council Member Helen Rosenthal (District 6, Manhattan).

“It makes no sense to punish small businesses by adding a nearly 4 percent tax to their rent, just because they decided to open up shop between 96th Street and the Financial District,”saidManhattan Borough President Gale A. Brewer. “Councilmember Garodnick’s reform proposal is a good start, and I support it. I’m also sponsoring legislation with Councilmember Corey Johnson to exempt affordable supermarkets from this tax entirely, and in the long term we need to start thinking about a full repeal. This tax is an unfair relic of a bygone financial crisis, and the mayor should include these sensible reforms in this year’s budget.”

When CRT was first introduced in 1963, it only affected large businesses. Yet today’s real estate market is a far cry from that of the 1960s. From 2012-2015 alone, commercial rents jumped 42%.  Figures from the Independent Budget Office (IBO) show that the number of Manhattan businesses paying CRT increased by more than 62% from 2013 to 2015. At the same time, the average CRT bill actually decreased from $96,589 to $68,536. These two figures demonstrate a troubling trend: more and more businesses are paying just above $250,000 in rent annually.  Because the growth has been on the lower end, the businesses stuck with CRT bills are often independently owned stores and mom-and-pops.

CRT is having a real impact on the business landscape in Manhattan. Just this week, NYC Comptroller Scott Stringer released a report that found the share of businesses located in the downtown and central business districts of Manhattan fell from 39% to 31% between 2000 and 2015. CRT is a costly burden that is dissuading individuals from growing a business in Manhattan.

CRT is unwise public policy. It is a double tax – landlords pay property taxes, and generally pass that cost on to their commercial tenants, who then they pay commercial rent tax on the same space. It’s also unfair because it is not only inapplicable in any other borough, but it is also inconsistent even within Manhattan. Businesses on the north side of 96th Street haven’t been obligated to pay CRT since the 1990s, and certain areas in lower Manhattan received a post-9/11 exemption, which is still on the books to this day.  

Legislation would bring relief to over 3,400 – or 40% of -- businesses that pay the tax, while only impacting 6% of the revenue it brings in. The huge impact we could make for Manhattan businesses, at a very limited cost, makes this a no-brainer.

“We need to support our small businesses – not target them with an unfair and antiquated commercial rent tax,” said Council Member Margaret S. Chin. “These businesses not only provide jobs for thousands of New Yorkers across our City, they provide essential and affordable services and goods for increasingly expensive Manhattan neighborhoods. Unfortunately, in part due to this burdensome tax, these businesses are being forced out – taking affordable food options, convenient services, and local character with them. We must act to pass this legislation to reform the CRT to prevent even more of these businesses from closing their doors. I thank Council Member Garodnick for his leadership on this important issue.”

"Small businesses are the engine that make New York City an economic powerhouse,"saidCouncil Member Ben Kallos. "Oppressive and obsolete tax laws dating back to the 1960s should not dictate how we do business. Thank you to Council Members Garodnick and Rosenthal for Introduction 799-A which if passed will bring much needed tax relief to over 3,400 small businesses."

"The success of the roughly 200,000 small businesses in New York City is of the utmost importance to me. As we continue to develop new policies that will assist small business owners adapt to the ever-changing marketplace, we must use all the tools we can to make it easier for them to operate their businesses. We’ve managed to reduce business fines and fees and now – as I said two years ago when my colleagues introduced this bill – we should reform the commercial rent tax. This will bring direct financial relief to small businesses in Manhattan’s costliest commercial districts and highlight our commitment to the businesses that help to make our City great. I urge Mayor de Blasio to support INT 799A," said Council Member Robert E. Cornegy, Jr. Chair of the Committee on Small Business.

"It's hard enough for a small business to survive in Manhattan, so we should do everything we can to help them thrive, not hit them with an unfair tax. I applaud Councilmembers Garodnick and Rosenthal for their proposal to provide relief to the mom and pop businesses that are the essence of our local neighborhoods," said State Senator Brad Hoylman.

“The commercial rent tax hurts small businesses. The tax was originally intended to affect only large businesses but is outdated and damaging to the economic well-being of small businesses.  Taxes should be based on revenue, not how much rent you pay.  Unless we reform the commercial rent tax, the Main Streets of many Manhattan neighborhoods will continue to become ‘chain streets,’ dominated by cookie-cutter national retailers and banks whose deep pockets enable them to shoulder the commercial rent tax burden,” said Assembly Member Richard N. Gottfried.

“With rampant real estate speculation, development pressures, and the Commercial Rent Tax, it is no wonder that our communities are losing small businesses, grocery stores, and independent restaurants that make neighborhoods livable and affordable. That is why reforming the Commercial Rent Tax is imperative to preserving essential neighborhood services. The City needs a comprehensive approach to addressing affordability problems, and reforming the Commercial Rent Tax is a step in that direction. I applaud Councilmember Garodnick and Borough President Brewer for leading the fight to ensure neighborhoods are livable,” said Assembly Member Deborah Glick.

"In the last few months Mayor de Blasio has found pockets of money to fund important initiatives like air conditioning in all city schools, addressing the opioid epidemic and constructing jails to replace the Rikers Island facility," said Jessica Walker, President and CEO of the Manhattan Chamber of Commerce. "Well this is critically important too. Small businesses are shutting down because no one has acted to shield them from a tax that was never intended to target them in the first place."

"The Commercial Rent Tax is unjust and poses a significant financial burden on thousands of small businesses. If we want to help save Manhattan’s beloved restaurants and protect the jobs of New Yorkers, I urge the NYC Council to pass -- and Mayor de Blasio to sign -- Council Member Dan Gardonick’s bill to reform the Commercial Rent Tax," said Andrew Rigie, Executive Director of the NYC Hospitality Alliance.