Sales tax revenues in New York dropped by 10% in 2020

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The COVID-19 pandemic led to a 10 percent decline in the Empire State’s local sales tax collections, with New York City hardest hit. That’s according to a report released Tuesday by New York State Comptroller Thomas DiNapoli.

Statewide, cities and counties collected $16.5 billion, down from the $18.2 billion communities received in 2019. New York City’s collections created nearly the entire shortfall as its sales tax revenue went from $8.2 billion in 2019 to $6.7 billion last year. While the Big Apple saw an 18.7 percent dip, no other region’s shortfall exceeded 3 percent.

“As a major tourist and business destination, New York City was particularly affected by travel restrictions, the closure of major attractions such as museums and Broadway theaters, and the reduction in daytime population caused by people working from home,” the comptroller’s report said.

The report also noted that New York City’s nonessential businesses were not allowed to reopen as quickly as businesses in other states, and that had an effect as well.

Some regions even experienced an uptick. That included the North Country, with a 2 percent jump to $277 million; the Mohawk Valley, with a 1.6 percent increase to $291.3 million; and the Mid-Hudson Valley, which experienced a 1.2 percent increase to $1.8 billion.

Westchester County fueled the Mid-Hudson growth on its own. The bedroom community just north of New York City saw the county sales tax revenues increase by 9.8 percent to $680.7 million. Only two other counties, Delaware (10.7 percent) and Oswego (10.5 percent), had higher percentage increases.

The comptroller’s report also breaks down tax collections by certain categories. Notably, revenues from the hospitality industry suffered greatly. From March to May, taxable sales from dining establishments were off by $6 billion, a 56.7 percent from the same period in 2019. From June to August, the decline was 39.5 percent, or $4.3 billion.

The losses from the “traveler accommodation” sector were smaller dollar-wise but more significant percentage-wise. The $2.6 billion drop in taxable sales from March to May represented an 84.4 percent drop from the prior year. The $2.7 billion decline from June to August was a 77.7 percent fall.

Not all business sectors saw declines. In fact, the revenue collected from e-commerce outlets more than offset the losses from the accommodations sector. The $3.1 billion gain in taxable sales from March to May was a 132.9 percent jump, and that grew over the summer. From June to August, those sales $3.4 billion, or 134.2 percent more than the same period in 2019.

The report notes that the pandemic changed how many people shopped, especially since several retail establishments were closed. Even after they began reopening, many people preferred to shop online to avoid crowds.

New York’s decision to tax online sales made by smaller out-of-state establishments also provided a boost. The report indicates those vendors made $7.7 billion in taxable sales from March to August. Those sales led to $328 million in local tax revenue.

Beer, wine and liquor stores saw 26.7 percent ($286 million) and 24.6 percent ($278 million) year-to-year jumps in taxable sales as well.

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