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February 13, 2014

Maragos: Nassau County Sales Tax Revenue Up 6.3% in 2013; 2014 Growth Uncertain

Mineola, NY- Nassau County Comptroller George Maragos announced the final sales tax figures for 2013 today and reported sales tax revenues increased by 6.3% to $1.138 billion (1.9% higher than budgeted). This was on top of another healthy increase of 4.2% in 2012. Although these were robust year over year increases some worrisome signs have appeared towards the end of 2013. The sales tax revenue during the holiday shopping season declined by 12.4% when compared to the same period in 2012. This tapering off at year-end is worrisome especially as nationwide retail sales were up 0.2% and GDP grew by 3.2%.

“When looking at these sales tax figures at face value it would seem Nassau County is recovering well from the recession and Superstorm Sandy,” Comptroller Maragos said. “Yet a closer look at the economic trends, especially the 4th quarter of 2013, show that we may have to temper our 2014 sales tax revenue projections.” (The Administration projected 2% growth over 2013)

The significant drop in sales tax receipts towards year-end may have signaled a significant shift in consumer shopping habits from store shopping to online as well as reflecting the impact of disappearing consumer income growth which was up only 0.25% in November and zero growth in December. The US Census Bureau projects online sales to increase 12.5% for 2013 through the 3rd quarter. Since 2004, the same statistics show that internet sales have tripled in terms of total retail sales, now comprising almost 6%.

The combination of flat income growth and the shifts from brick and mortar stores to online are especially troubling to Nassau County as well as other municipalities which rely heavily on sales tax revenues. Online sales, some of which may originate overseas may be more difficult to track or collect sales or use tax. The recent federal court decisions requiring online vendors such as Amazon to collect and submit sales tax may slow the sales tax decline but will not have the same enforcement as with local brick and mortar stores.

“The Comptroller’s office will continue to monitor sales tax figures for the County and may advise the administration to lower its projections for 2014 as the reality for this year and beyond may be smaller gains in sales tax revenues due to nonexistent consumer income growth and shifts in buying habits.”

Below are comparisons of 2013 sales tax revenues to 2012.

                                        Sales Tax Analysis

Connect with Nassau County Comptroller Maragos Online:
http://www.nassaucountyny.gov/agencies/Comptroller/index.html

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