Sales tax revenue for local governments in New York state rose by 49.2 percent in the second quarter (April to June 2021) compared to the same period last year, a dramatic increase from last year’s abysmal collections during the initial wave of the Covid-19 pandemic, according to State Comptroller Thomas P. DiNapoli. Sales tax collections during this period totaled just over $1.6 billion and even surpassed collections reported during the second quarter of 2019, before the onset of Covid-19.
Every region outside of New York City experienced two-year growth over 18 percent. The Mid-Hudson and North Country regions both reported increases of over 29 percent. As for New York City, collections grew by 44.6 percent in the second quarter of 2021, the first increase after four quarters of year-over-year declines, but unfortunately its total collections have yet to return to pre-pandemic levels. An increase in out of vendors required to remit local sales tax as well as requirements by online marketplaces to remit sales tax helped keep boost sales tax receipts above the state’s original estimates. New York’s ability to capture this revenue as consumer behavior shifted combined with pent-up demand, and purchases related to the spike in home sales all contributed to the almost 50 percent jump.
However, as the Comptroller warned “While this is good news, local leaders are advised to budget carefully. If this pandemic has taught us anything, it’s to always plan for unpredictable circumstances.” The surging delta variant has led to the return of some travel and tourism restrictions. There was already recovery concerns based on the rising consumer prices but inflation was expected to decline as the economy worked through a volatile reopening period. Those recovery projections have become less rosy amid concerns that economic growth has peaked.
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