ALBANY – The pent-up demand amid the COVID-19 pandemic and stricter debt collection laws have resulted in a surge in sales tax revenue in New York so far this year.
This is good news for local governments and the state economy as New York continues to emerge from the doldrums of the pandemic.
Municipalities’ sales tax revenues increased 49% from April through June compared to the same period last year amid the lows of COVID. And collections have grown 19% year-to-date, adding $ 1.5 billion in sales, according to a report by state auditor Thomas DiNapoli.
Sales tax revenues in the second quarter were even higher than in the same period in 2019, before the outbreak of the pandemic, he noted.
“The strength of these collections, along with federal aid, will give local governments across the state an opportunity to improve their budgetary stability, but it will take time to recover from the stresses caused by the COVID-19 pandemic,” DiNapoli said in one Explanation.
Some areas of the state have recovered better than others.
Every region outside of New York City saw more than 18% growth over two years, led by 29% increases in the Hudson Valley and North Country, state data showed.
Sales in the Mohawk Valley rose 26%, while sales in the Finger Lakes and Southern Tier rose 24% each, the records showed.
Sales tax is the largest source of income for New York counties, and even outperforms property tax. Most New York counties have a 4% sales tax on goods and services, while the state has its own 4% tax.
The state and local governments have also benefited from the changes in tax laws in recent years.
Many out of state vendors are now required to collect and pay state and local sales taxes following a federal decree in 2018, and online marketplaces like eBay and Etsy are required to collect and pay sales taxes on behalf of their third party sellers, DiNapoli said.
A surge in home sales that year also helped sales tax revenue, he said.
The increase in tax revenue coupled with federal stimulus money for state and local governments should reduce reliance on taxpayers to fund programs and services, said the Empire Center for Public Policy, a financially conservative think tank based in Albany.
Robust sales tax growth “shows how outside of New York City the general decline in sales tax revenues across the state in the past year and a half has not been nearly as strong as feared,” the group said in its sales tax recap.
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Joseph Spector is government and policy editor for the Atlantic Group on the USA TODAY Network and oversees reporting in New York, New Jersey, Pennsylvania, Maryland and Delaware. He can be reached at [email protected] or follow us on Twitter: @GannettAlbany
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