Proposed Tax Cut for Businesses Puts Mayor de Blasio at Odds With His Party

By Mike Vilensky Features Dow Jones Newswires

The New York City Council is clashing with Mayor Bill de Blasio as it pushes something rare for the liberal legislative body: a tax cut.

Continue Reading Below

Amid a rise in retail closures, a bipartisan majority of council members now supports legislation to roll back a 54-year-old tax on Manhattan's commercial businesses.

The effort has put Mr. de Blasio, who has been wary of the idea, on the defensive versus Democratic City Council members, with whom he is generally aligned. The council coalition now has enough members' backing the bill to override a mayoral veto if it comes to that.

"Manhattan retail is in crisis," said Councilman Daniel Garodnick, a Democrat representing Manhattan's East side who sponsored the bill. "We cannot wait any longer."

The legislation was enacted in 1963 but attracted growing attention during the past few months as the city grapples with a string of retail closings, mirroring a national trend.

Retailers have announced 5,630 major store closures in the U.S. this year, a 175% increase over the same period last year, according to an Aug. 18 report from Fung Global Retail & Technology, a retail think tank.

Continue Reading Below

Empty storefronts are increasingly visible in the streets of Manhattan. A mid-year report from real-estate firm Cushman & Wakefield shows Manhattan retail markets are asking less for rents in once bustling retail markets such as SoHo and Times Square.

Mr. Gardonick's legislation would modify a roughly 4% tax on annual commercial rents of at least $250,000 for Manhattan tenants below 96th Street. It proposes raising the threshold at which the tax kicks in to $500,000.

The city's taxes typically are controlled by the state, but the commercial-rent tax, instituted in 1963 as the city's economy floundered, is controlled by the city.

Mr. de Blasio has expressed concerns about losing city revenue since Republican President Donald Trump took office this year and proposed cuts. The mayor's office said Mr. de Blasio is finding other ways to help small businesses succeed, including reducing fines against them and connecting them with city funding.

"[G]iven 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," said Freddi Goldstein, a mayoral spokeswoman.

The council has estimated the tax cut would cost the city $55 million in revenue and suggested making it up through savings.

Council Speaker Melissa Mark-Viverito, a Democrat, is often allied with the mayor but has gone up against him on certain issues when the council clashed with his agenda.

She will decide if the bill gets a vote before she is term-limited out of the council next year.

"Council members have expressed strong interest in moving forward with the [bill] and it is under close review," said Robin Levine, Ms. Mark-Viverito's spokeswoman.

The council bill now has 41 sponsors, more than the two-thirds of the council's 51 members required to override a mayoral veto. Mr. de Blasio has never suffered a veto override from the council, and it would be a stinging rebuke in his election year.

His Republican challenger, Assemblywoman Nicole Malliotakis, said she supports the legislation.

Write to Mike Vilensky at mike.vilensky@dowjones.com

(END) Dow Jones Newswires

August 21, 2017 07:14 ET (11:14 GMT)