End destructive hidden taxes
- Last Updated: 3:57 AM, July 29, 2012
- Posted: 10:55 PM, July 28, 2012
In two days, Margo Lewis could lose her business, and City Hall is the culprit. She opened her Bedford-Stuyvesant coffee shop when the recession was at its worst — and beat the odds to become a neighborhood institution. She overcame rent disputes with her landlord. When two robberies cleaned her out, she started making take-home barbecue dinners to stay afloat and managed to hang on.
But then the Department of Health came knocking.
When they walked out the door, Margo had $3,300 in fines she couldn’t afford for violations like having scratches on her cutting board (imagine that) and leaving a damp cloth folded on a counter. She was told to pay up or lose her permit. It didn’t matter that Margo fixed all the nit-picky problems right away — including a few her landlord should have handled. It doesn’t matter than she now has her “A” rating. She can either pay the city or shut her doors for good on Tuesday.
Think about that. City Hall is closing a business — an employer — at a time when we have 10% unemployment (since this is Brooklyn, the rate is actually 11%). This isn’t about health and safety — if it was, Margo’s fines would have been forgiven after she fixed the problems. This is about revenue. The city is hauling in twice as much from fines as it did 10 years ago; it’s now close to $820 million each year.
And it’s across the board. Department of Finance’s fines went up 50% since 2002. Consumer Affairs’ doubled. The Buildings Department tripled. And the Health Department? Their fines went up more than four-fold.
What’s driving these numbers? Are New Yorkers really twice as law-breaking as a decade ago? Are inspectors that much more observant?
Ask City Hall what’s driving the record levels of fines, and you’ll be met with stony silence.
Ask any business owner, and they will tell you it’s because New York cares less about enforcing the laws than it does about raising revenue any way it can. Nothing is too small to overlook. Return policy printed on your receipts instead of posted behind the counter? That’s a $250 fine . . . per register. If the knife sticks out past the napkin on a dining room table? That’s could run anywhere from $200 to $2,000. It doesn’t matter if it’s a first-time offense. It doesn’t matter if you fix it right away.
All these fines belie the myth that New York City hasn’t increased taxes in recent years. On the contrary, these hidden taxes have been hurting businesses more and more with every passing budget. City Hall now counts on the annual haul from fines just like it does any other tax. It budgets for the revenue it needs at the beginning of the year, and it sends out inspectors on a mission to bring back the dough.
If no one got hurt, maybe we could forgive these policies. Budgets have not been easy to balance these last few years.
But when aggressive fines prevent employers from adding new staff or drive them to shut their doors, we can’t look the other way. It is long past time to shine some sunlight on what this hidden tax is doing to struggling businesses across the city.
Two months ago, I tried prying information from city agencies about which violations are generating all the new revenue, which neighborhoods and businesses are being hit hardest, and whether quotas were responsible for driving the record level of fines. Not a single agency turned over the data.
So, this past week, I filed a lawsuit to open the books on small business fines. Suing the mayor isn’t something I take lightly — this is the first lawsuit the Public Advocate’s Office has filed in 15 years.
But if it takes a judge to compel the mayor and his commissioners to admit that budget quotas and a drive for revenue are responsible for all these fines, so be it.
The stakes couldn’t be higher. We haven’t had unemployment like this in New York City in 20 years. Small businesses face headwinds like never before. Credit is still tight. Sales are still in a slump, especially for neighborhood businesses that don’t have Manhattan’s tourists. One in six New York small businesses doesn’t have the cash to pay bills on time. Nationally, only 3% of small businesses expect to add jobs in the coming year.
Mayor Bloomberg boasts about making New York City “the best place in the world to start a business.” That’s not a title we can claim when city policies are holding back businesses like Margo’s and forcing them to close their doors.
It’s time for City Hall to come clean on why and how it’s raising so much money on the backs of small businesses.
It’s time for City Hall to stop treating the economic backbone of our neighborhoods like an ATM.
We can be the best place in the world to start a business — but we need to change our enforcement approach to get there.
Bill de Blasio is New York City’s Public Advocate.Follow @NYPostOpinion