Comptroller Scott Stringer, a Democrat, said his Save Main Street proposal seeks to help struggling small businesses access federal aid and receive financial help and use tax benefits to help them deal with the severe effects of the novel coronavirus, which causes the respiratory illness COVID-19.
"Every small business in New York City that hasn't yet closed is fighting for survival," Stringer said. "The city must deliver much-needed relief to help businesses reopen, stay open, and revive high-vacancy corridors that have been devastated by the pandemic."
Among the tax-related proposals, which would need to be signed off on by city lawmakers and the mayor, are refundable business income tax credits for retailers, restaurants and personal services businesses with annual revenue below $5 million, Stringer's office said. The tax credits would aim to allow businesses to recoup money spent on outfitting their shops for the needs of the pandemic, such as safety equipment and reconfiguration for outdoor dining.
New York City should also provide tax credits to entrepreneurs in retail corridors that have "persistently high vacancy rates," Stringer said. The city Department of Small Business Services would work with the city Department of Finance to map retail areas and monitor vacancy rates, then offer business owners that move into those areas a credit against either the city's commercial rent tax in Manhattan or city real property tax, Stringer's office said. If it is applied to property tax, landlords would have to calculate how much of their rent comes from leased retail space, the office said.
A September report from the city's comptroller found the vacancy rate in New York City nearly doubled from 2007 through 2017 due to a confluence of factors, including the rise of internet retail markets, growing commercial rents and burdensome city regulations for obtaining permits. The report said an additional 5.2 million square feet of retail space in the city was vacant in 2017 as compared with 2007.
New York City should also eliminate its 25% tax on businesses' annual beer, wine and liquor license fees, the report said.
The proposals won support from business interests. Kathryn Wylde, president and CEO of the Partnership for New York City, which is made up of city business leaders, told Law360 in a statement that the group welcomed the discussion of tax relief for local businesses that have been hurt by the pandemic.
"But, as the comptroller has pointed out, the city's fiscal situation is dire and proposals that reduce revenues need to be accompanied by cuts in expenditures, or we are just digging the city into a deeper hole," Wylde said.
And Andrew Rigie, executive director of the New York City Hospitality Alliance, told Law360 in a statement the proposals are "incredibly important to help struggling small businesses survive."
"There's not one silver bullet policy that will save restaurants. That's why we need a package of policies like those contained in this report to give them a fighting chance," Rigie said.
Laura Feyer, a spokesperson for Mayor Bill de Blasio, told Law360 the administration was reviewing the proposals.
Democratic council member Kalman Yeger told Law360 in a statement that any proposal to relieve the burden on businesses in New York city must be seriously considered.
"New York City has long balanced its budget on the back of small business through taxes, fees and the cost of incessant regulatory burden," Yeger said. "The city can and should take immediate steps to ease up on taxpayers."
The proposal is among several that have been proposed to help the city's struggling businesses amid the pandemic, the ensuing economic crisis and social distancing measures. Last month, a proposal was introduced in the New York City Council to temporarily suspend the city's commercial rent tax during the pandemic state of emergency.
New York City business leaders also asked political leaders last month to consider cutting tax subsidies, ending regional tax incentive competition and eliminating commercial rent taxes on some businesses in light of the economic hit caused by the COVID-19 pandemic. In March, New York City Council Speaker Corey Johnson called for deferrals of sales, commercial rent and business taxes and new taxes on payroll, high-end commercial property and the wealthy to combat the economic harm of the COVID-19 pandemic.
While Jonas Shaende, chief economist at the Fiscal Policy Institute, told Law360 the overall package appeared business friendly, he said it also overstates what it can achieve. He noted that small businesses being targeted by the tax measures are heavily used by tourists, who add $64 billion annually to the city's economy. But without those tourists, the tax incentives might not have much of an effect in providing relief, he said.
"The enormity of our crisis is such that it may still be an insufficient effort to save Main Street," Shaende said.
--Additional reporting by Asha Glover. Editing by Vincent Sherry.
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