RP embassy in New York owes city $29.6 million in taxes

NEW YORK — New York City is struggling to collect $200 million it claims foreign countries owe in property taxes.

Embassies, consulates and diplomatic missions are generally tax-exempt, but New York has insisted it may tax parts of buildings used for non-diplomatic purposes, like housing or restaurants.

The city has been tied up in court for two years with India, the Philippines and the Mongolian Peoples Republic over their respective tax bills of $27.8 million, $29.6 million and $3.4 million.

Robert Kandel, a lawyer representing those countries, said most of that alleged debt is interest on disputed bills that are years or decades old. He said the case is not about foreign powers ignoring the city’s authority.

"These foreign governments are very respectful of the city’s obligations and are not taking these positions casually, but solely as a matter of the highest principal of international law," he said.

Other countries with unpaid tax bills are Hungary ($62 million), Libya ($4.3 million), Rwanda ($1.3 million), Nigeria ($1.1 million) and Uganda ($559,750). Turkey was also a defendant in one of the city’s lawsuits, but settled for $5 million.

Federal law would only allow United States aid money to be deducted from those countries after a court renders a final judgment in a tax dispute, and that has yet to happen.

The result of New York’s legal battle will probably be noted across the Atlantic, where American diplomats are in a tax brouhaha of their own.

In July, the US ambassador to England ordered his sizable diplomatic staff to stop paying the eight British pound daily charge for vehicles entering central London. International treaties, he said, prohibited taxes of any sort on diplomats.

Since then, US officials in London have refused to pay tens of thousands of pounds in tolls and fines, thus carrying on an American aversion to British taxation that dates back 240 years when the British parliament imposed the first direct tax on the colonies. The Stamp Act of 1765 provoked an outcry from the colonists who said there should be no taxation without representation.

New York City has had more success in persuading foreign officials to pay parking ticket fines since a threatened crackdown three years ago.

According to New York’s finance department, diplomats have received 90 percent fewer tickets since late 2002, when the US threatened to revoke the license plates of those who broke the law and subtract however much they owed in fines from the foreign aid their countries received.

Those who do get citations have become better about paying them. Of the 11,771 parking violations issued to diplomats in the past three years, 87 percent have been paid or successfully appealed, the city said. Many of the remainder are still working through the legal system.

"When diplomats do receive tickets, they are contesting and paying them just like regular New Yorkers," city finance commissioner Martha Stark said.

On Thursday, the only obvious parking violators near the United Nations (UN) appeared to be cars bearing regular New York plates illegally parked in spots reserved for diplomats.

But that has not always been the case.

Between April of 1997 and October of 2002, holders of diplomatic plates racked up 205,732 parking tickets in New York. About $18.1 million of those fines have yet to be paid.

The tally so outraged then-Mayor Rudolph Giuliani, he threatened to tow away diplomatic vehicles and sell them.

His successor, Michael Bloomberg, reached a deal with the US State Department in 2002 that implemented some of today’s enforcement measures.

"Nothing gets New Yorkers more angry than when diplomats think they can live by different rules than the rest of us," said US Sen. Charles Schumer, who pushed through a renewal this fall of the legislation allowing unpaid taxes and fines to be garnished from aid payments. — AP