NYC-WTC_000195490

NYC 9/11 Public Portal Document

;he COMMERCIAL RENT TAX COMMERCIAL RENT TAX 1992-2002 to of The commercial rent tax is projected 800 to account for 1.6 percent of tax revenue in 2002, or $364 million. 700 )tn 600

I- 5a ' Tax Base and Rate: The commercial ior / rent or occupancy; tax is imposed under of Chapter 7 of Title 11 of the New York City Administrative Code, on the rental ‘’400 of space in New York City for 300 commercial or professional purposes. The tax is levied only on tenants who 200 I--- L_——.U--- L__J--- --- --- --- --- rent space in Manhattan south of 96th 1992 1993 1994 1995 1996/1997 1998 1999 2000 2001 2002 Street at an effective rate of 3.9 percent. / f?iscal Year Tenants whose base rents are less than $150,000 per year do not pay tax; those whose base rents are in excess of $150,000 but less than $190,000 receive h sliding-scale credit

Legislative History: The commercial rent tax was first imposed on June 1, 1963 at a rate of five percent on base rents of $2,500 and over. On June 1, 1970, a graduated rate schedule was adopted:

Base Rent Tax Rate

$0 to $2,499 2.50% $2,500 to $4,999 5.00 $5,000 to $7,999 6.25 $8,000 to $10,999 7.00 $11,000 or over 7.50 ------------- -------——----------,------------- -------------------------------- -H In 1977, the City began a tax reduction program that effectively reduced the tax rate by 20 percent over four years.; The maximum rate was reduced to 6.75 percent as of June 1, 1977, to 6.375 percent in 1980 and to six percent i'n 1981. Effective June 1, 1981, a tenant whose annual base rent was less than $5,000 was exempt from the tax. The base rent exemption was increased to $8,000 on June 1, 1984 and to $11,000 on Decerriber 1,1984. ;

In 1985, the City instituted a tax reduction program which lowered the commercial rent tax for taxpayers in ceirtain locations. As of January 1, 1986, the base rent for taxable premises located in Manhattan north of 96th Street and in the Bronx, Brooklyn, Queens and Staten Island was reduced by 10 percent. The base rent was reduced by 20 percent as of June 1, 1987, and by 30 percent as of June 1, 1989 for a total reduction worth $34 million in 1995. In 1994, a 25 percent tax credit was granted to taxpayers located in Manhattan below 96th Street whose base rent was between $11,000 and $14,000, and to those located north of 96th Street in , Manhattan and in the other boroughs whose base rent was between $15,715 and $20,000, The cost of this credit was $2.5 million. In 1995, this credit expanded to a full exemption for taxpayers with base rent up to $21,000 in central and lower Manhattan and up to $30,000 elsewhere. The estimated cost of this exemption was $28 million. !

Beginning in 1996, the base rent exemption was raised to $31,000 in central and lower Manhattan and $44,286 elsewhere, at an estimated cost of $28 million. In addition, primary tenants became eligible to deduct the rent received from sub-tenants, even if the sub-tenant was exempt from tax. This legislation also raised the

41 w

NYC-WTC_000195538