An rents rise, an increasing number oi mom and pop stores in Manhattan are having to pay a special business tax. Many of the store owners say that without relief, they might have to close. But it's not an issue high on the mayor's agenda. Michael Scotto has the story in the final part of his series on the retail crisis sweeping the city.
Three years after Natasha Amott opened her kitchen supply shop in the Flatiron District, she says she was hit with a huge bill for a tax she had never heard of.
"All of a sudden I was faced with a charge of $20,000," she recalled.
Amott is talking about the commercial rent tax - a 3.9 percent surcharge on annual rents of more than $250,000 paid by stores and selected businesses south of 96th Street in Manhattan.
"How do you have a tax based on your zip code that's not tied to revenue? I already pay corporate taxes, it's not tied to that. It's just simply the city saying, you already pay a high rent, so pay this money to us as well," Amott said.
The tax began in the 1960s when the city needed cash. In 1995, the city eliminated it everywhere except about half of Manhattan. Some areas near the World Trade Center were exempted after 9/11. But with rents soaring, a growing number of stores have to pay - including mom and pop shops already battered by high costs and online competition.
"More and more businesses are being covered by this crazy tax. So we need to give them relief. It's unfair and it's out of date," said City Councilman Dan Garodnick.
Natasha Amott now pays $15,300 a year in commercial rent taxes. That's on top of other taxe, including $27,000 of her landlord's annual property tax bill.
Eleven-thousand leases are now subject to the tax, which generated nearly $779 million last year.
Garodnick is sponsoring a bill to exempt businesses with annual rents up to $500,000. That's twice the threshold today. He estimates it would shield another 3,500 establishments from the levy.
A majority of the City Council supports the bill as does Republican mayoral candidate Nicole Malliotakis.
But Mayor Bill de Blasio has never shown much interest in a rollback.
An aide tells NY1, "Especially given the uncertainty about the federal budget, health care and tax reform, we don't feel it's the right time to take major action on the commercial rent tax.”
The tax has become an issue in local races. On the Upper West Side, it is a cornerstone of the City Council campaign between Mel Wymore and incumbent Helen Rosenthal. Both say the issue resonates with voters amid so many vacant storefronts.
"Everyone feels it; everyone sees their favorite bodega went out business that they've been going to for years," Wymore said.
"It's a Manhattan problem, it's a citywide problem that deserves a citywide solution," Rosenthal said.
For business owners like Amott, relief cannot come soon enough. Without it, she says she might have to close when her lease expires in five years.