Inflation Boosts Sales Tax Revenue | News
ALBANY – With rising goods prices due to inflation pinching consumers’ wallets, New York county governments saw a notable increase in sales tax collections in the first quarter of 2022, according to new state data.
The latest revenue reports show sales tax collections outside of New York rose 15.2% in the first quarter of 2022 compared to the same period a year earlier.
But that doesn’t mean county government officials are rolling in the dough. The prices they pay for goods and services have also jumped as inflation spreads throughout the economy, the New York State Counties Association pointed out.
The gains in sales tax collection stem from several factors, including inflation and pent-up consumer demand after the easing of COVID-19 restrictions, said Stephen J. Acquario, director of the association.
“These are volatile economic times for residents and businesses, and counties are experiencing the same unexpected growth in costs that all New Yorkers face – for everything from fuel to road maintenance equipment to by skill shortages.” Acquario told CNHI.
Higher gasoline prices played a role in the increase in collections. Local taxes imposed on the sale of fuel are a major component of local sales tax revenue, according to the State Comptroller’s Office, which shared sales tax data it gleaned from the Department. taxation and state finance.
Data showed that most upstate counties saw double-digit gains in sales tax collections in the first quarter of the year, nearing the regional average of 15.2% .
Niagara County, for example, saw a 16% jump in the first three months of this year compared to the same period last year.
Otsego County earned 12.1% more in sales taxes during the period. Chenango County’s increase was 15.9%, while Delaware County saw a 16.% jump. Schoharie County’s increase for the quarter was set at 15.8%
In the North Country, Clinton County collections increased 10.4% in the quarter. In Essex County, the increase was 13.3%. And in Franklin County, sales tax revenue increased 11.9%.
For counties, the one-year difference translates into real money.
For example, although its gain was below the average for the entire upstate, Clinton County’s total sales tax collections for the first three months of this year represented an increase of about $1.5 million from the same time last year, according to state data.
Although collections soared in the upstate region, they were overtaken by New York sales tax gains. New York City collections in the first quarter increased 28.5% from the same period last year and exceeded pre-pandemic levels for the second consecutive quarter after remaining below pre-pandemic levels. pandemics for most of 2020 and 2021.
The Comptroller’s Office noted that the five boroughs have taken longer to recover from the pandemic than other areas of New York.
The biggest upstate gain was Broome County, which saw its collections increase by 24.3%.
Among cities imposing their own sales tax, Norwich, in Chenango County, saw the largest gain, with a 30.8% jump.
The Comptroller’s Office pointed out in its report that sales tax can be influenced by changing economic trends and that the higher costs faced by local governments can be offset by the additional revenue generated when property prices rise. with inflation.
Many local governments rely primarily on property tax revenues to fund their services. The property tax is capped at 2% annual growth.
The state budget for the fiscal year that begins April 1 includes a temporary cut of 16 cents per gallon on gasoline from June through December.
Local governments have also been allowed to provide relief on their share of gasoline sales taxes, and some have already taken this step.