Inflation and Growth in NYC Were Key Drivers for the Increase
Local government sales tax collections in New York state totaled $22.1 billion in calendar year 2022, up 12.7%, or $2.5 billion, from 2021 due to strong sales statewide, especially in New York City, according to a report released today by State Comptroller Thomas P. DiNapoli.
“The pandemic created significant sales tax volatility over the past few years, first with a major decline, then with a strong rebound,” DiNapoli said. “Sales tax growth has remained strong for a sustained stretch as consumers resumed spending relatively quickly after pandemic shutdowns ended. Additionally, the state implemented policies just prior to the pandemic that ensured more online sales were being fully taxed.”
Local sales tax growth in 2022’s fourth quarter (October to December) increased by 8.8% over the same quarter of 2021, which was similar to the year-over-year rates seen in the prior two quarters. This was after sales taxes in the first quarter grew by 21.1%, compared to fairly weak collections from the same quarter in 2021, when COVID infection rates were peaking, public vaccinations had not been fully rolled out and travel restrictions were still in place.
Inflation, even with the impact of the gas tax holiday, was one of the main drivers for sales tax growth in 2022, reaching a higher rate than in any recent year after a decade of lower-than-average inflation growth. Even as consumer demand for goods cooled somewhat during the year, the price of those goods continued to rise, sustaining high year-over-year growth in collections. As the pace of inflation moderated in the third quarter (July to September) and fourth quarter, however, so did collections growth.
New York City’s sales tax growth for 2022 was 20.6%, which exceeded that of the counties and cities throughout the rest of the state (6.5%), after lagging in 2021. The city’s collections have shown strong year-over-year growth after rebounding to pre-pandemic levels this past year. This growth has been boosted by increases in commuters returning to the office, and domestic and international tourism, which has helped strengthen service industry sectors, such as accommodation and food services, transportation, and arts, entertainment and recreation.
After strong quarterly year-over-year increases for most of 2021 and early 2022, sales tax growth outside of New York City slowed to 2.6% in the April to June period, well below the rate of inflation. While both third quarter (5.3%) and fourth quarter (4.5%) growth were a bit stronger, year-over-year collections may be returning to more typical pre-pandemic growth levels.
Every county saw some year-over-year growth in sales tax collections in 2022 with 41 out of 57 counties (72%) recording increases ranging from 4% to 10%. Yates County had the strongest growth at 21.1%, followed by the counties of Lewis (14.9%), Montgomery (12.4%) and Schoharie (11.8%). Dutchess County grew the least at 1.6%, followed by the counties of Jefferson, Chenango and Orleans, each at 2.4%.
The 18 cities outside of New York City that impose their own sales tax also experienced year-over-year growth in 2022. Saratoga Springs saw the strongest growth at 14.6%, followed by the cities of Johnstown (12.2%), Glens Falls (11%) and Ithaca (10.7%). Olean had the lowest growth at 0.5%.
Report
No comments:
Post a Comment