Sales Tax Revenue Drops 10% in NY, More Than 2009 Recession

AP

Feb 2, 2021

New York sales tax collections dropped by $1.8 billion or 10% in 2020 compared to 2019, State Comptroller Tom DiNapoli said in a report released Tuesday. That’s more than in the 2009 recession, when collections dropped 6%.

Sales tax revenue dropped most sharply in the second quarter as Gov. Andrew Cuomo closed nonessential businesses statewide. Collections plummeted 27.1% from April to June compared to the previous year.

Drops in sales tax collection in New York City, which represents over 40% of sales tax collections statewide, fueled much of the state’s losses. The city saw a 35% drop from April to June, then a roughly 20% dip for the rest of the year.

The pandemic bolstered consumer spending on alcohol and online shopping, as people avoided crowed places. Meanwhile, travel accommodation, restaurants and clothing stores saw the biggest drops in sales.

“This report shows how deeply the COVID-19 pandemic cut into municipal finances,” DiNapoli, a Democrat, said. “Local governments depend heavily on sales taxes as a major source of revenue, but as New Yorkers stayed home and bought less in their communities during the pandemic it created significant shortfalls. New York’s localities need federal aid to help get through this crisis.”