Sales tax revenue skyrockets for local governments

BY: JOSEPH SPECTOR | 02/06/2023 09:55 AM EST

ALBANY, N.Y. — Inflation was good news for local governments.

Municipalities in New York collected $22.1 billion in local sales tax last year, up 12.7 percent, or $2.5 billion, from 2021 due to strong sales statewide, especially in New York City, Comptroller Tom DiNapoli said in a report released Monday.

Sales tax revenue is critical for New York’s 62 counties and its cities that have their own sales tax on goods and services. It is their largest revenue source, ahead of property taxes.

“The pandemic created significant sales tax volatility over the past few years, first with a major decline, then with a strong rebound,” DiNapoli said in a statement. “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.”

A report Monday, Feb. 6, 2023, from state Comptroller Tom DiNapoli shows how sales tax revenue rose in 2022 for local governments. | Office of New York State Comptroller

In the fourth quarter of 2022, sales tax revenue increased by 8.8 percent over the same period last year. The biggest jump in 2022 was in the first quarter, when collections grew 21 percent compared to the same stretch in 2021, when Covid-19 was rampant and vaccines were limited.

DiNapoli said inflation helped fuel the growth in sales tax collections: Higher prices mean higher tax revenue.

New York City’s sales tax growth for 2022 was 20.6 percent, which outpaced any other county or city in the state — boosted by commuters returning to the office, tourism and resumption of many entertainment options.

Every county saw some year-over-year growth in sales tax collections in 2022, DiNapoli said.