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New York City’s tax woes are continuing to mount as the pandemic-driven shift from Manhattan’s gleaming skyscrapers to work-from-home appears to be becoming more permanent — potentially costing the Big Apple $111 million in sales tax revenues alone.
The Comptroller’s Office projects that even if workers return to their offices three days a week, merchants, restaurants, and other businesses that cater to the 9-to-5 crowd would still lose an estimated $1.6 billion in sales — costing city coffers more than $146 million taxes.
Those losses would only be partially offset by $35 million in new taxes generated by those workers patronizing businesses in their neighborhoods, the study found.
“Our analysis shows that the pandemic has fundamentally altered the way people work, with far reaching implications on the city’s economy and tax base,” said Comptroller Scott Stringer, in a statement.
“As remote work and hybrid work schedules keep many workers closer to home, small businesses in residential districts may see a boost from New Yorkers spending more in their neighborhoods,” he added, before warning that: “[T]he loss of foot traffic and lower sales may be severely felt by small businesses in the city’s commercial districts.”
City budget writers initially projected $7.4 billion in revenues from sales taxes throughout the 2022 budget year.
Growing worries about a sales tax swoon comes as the city’s finances are already under significant strain thanks to a $2 billion projected drop in property tax revenues, largely caused by significant declines in the evaluations for those now-empty office towers.
Mayor Bill de Blasio leaned on a massive injection of federal aid to balance the city’s budget this year as he struck a budget deal with the City Council that grew spending to a record $98.7 billion.
However, his successor — set to take office Jan. 1 — will be tasked with tackling projected budget deficits of at least $3.8 billion each year over the next three years.
Hizzoner said Tuesday morning he had not yet read the report — but a City Hall spokeswoman later replied to Stringer’s analysis.
“Our aggressive vaccination campaign and the investments we have made to jumpstart the economy will continue to drive economic growth across the city,” said the rep, Laura Feyer.
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