josh goldstein - recent trends in nyc’s sales tax...store retailers general merchandise build...
TRANSCRIPT
The City of New York Office of Management and Budget Tax Policy, Revenue Forecasting & Economic Analysis
Recent Trends in NYC’s Sales Tax
E-commerce, tourism, and general growth trends.
Presented at the FTA Revenue Estimation and Tax Research Conference. September 2017
Retail “Apocalypse” § The Atlantic, April 2017 “What in the World Is Causing the Retail Meltdown of 2017?” § CNN Money, April 2017 “Stores are closing at an epic pace” § Fortune, May 2017 “Major Wall Street Firm Expects 25% of U.S. Malls to Close by 2022” * § Time, June 2017 22 “Retailers That Are at Serious Risk of Bankruptcy” § Bloomberg, September 2017 “Toys ‘R’ Us Collapses Into Bankruptcy Thanks to Crushing Debt
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8640
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
UnitClosing(FullYearEs=mate)*
Source(s): Credit Suisse
Sales tax collections have slowed over the past 3 years
-10%
-5%
0%
5%
10%
15%
FY81 FY83 FY85 FY87 FY89 FY91 FY93 FY95 FY97 FY99 FY01 FY03 FY05 FY07 FY09 FY11 FY13 FY15 FY17*
NYC Sales Tax Growth (common rate and base)
Sales Tax Growth Rate FY81-FY17* Average
3
Source(s): NYC OMB
U.S. Trends
In the most recent expansionary period U.S. consumption growth has been slow.
5
-4
-2
0
2
4
6
8
101966Q1
1969Q1
1972Q1
1975Q1
1978Q1
1981Q1
1984Q1
1987Q1
1990Q1
1993Q1
1996Q1
1999Q1
2002Q1
2005Q1
2008Q1
2011Q1
2014Q1
2017Q1
Y/YPe
rcen
tChange
RealConsump=onGrowth
Source: Bureau of Economic Analysis
The slowdown in consumption is consistent with weak income growth.
6
-6
-4
-2
0
2
4
6
8
10
12
14 19
66
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Perc
ent C
hang
e Y/
Y
U.S. Personal Income (Nominal) U.S. Consumption (Nominal)
Log(U.S. Consumption) = -.43 + 1.02 Log (U.S Personal Income)
Source: Bureau of Economic Analysis, OMB Analysis
U.S. Retail Trade Sales
7
-10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
Gasoline stations [447]
Electronics and appliance stores [443]
General merchandise stores [452]
Sporting goods; hobby; book and music stores [451]
Clothing and clothing accessories stores [448]
Retail trade [44 to 45]
Food and beverage stores [445]
Miscellaneous store retailers [453]
Furniture and home furnishings stores [442]
Building material and garden supply stores [444]
Health and personal care stores [446]
Motor vehicle and parts dealers [441]
Food services and drinking places [722]
Nonstore retailers [454]
CAGR 1992-2016
CAGR 2009-2016
CAGR 2013-2016
Source: U.S. Census
Oil prices drove down the value of Retail Trade
8
$97.94
$43.21
0
20
40
60
80
100
120
1993
19
94
1995
19
96
1997
19
98
1999
20
00
2001
20
02
2003
20
04
2005
20
06
2007
20
08
2009
20
10
2011
20
12
2013
20
14
2015
20
16
WTI $ bbl
Source: EIA
2.7%
3.5%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
1993
19
94
1995
19
96
1997
19
98
1999
20
00
2001
20
02
2003
20
04
2005
20
06
2007
20
08
2009
20
10
2011
20
12
2013
20
14
2015
20
16
Retail Trade W/O Gas % Chg
Total Retail Sales Retail Sales W/O Gasoline
E-commerce is steadily gaining retail market share
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0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Mar
-00
Mar
-01
Mar
-02
Mar
-03
Mar
-04
Mar
-05
Mar
-06
Mar
-07
Mar
-08
Mar
-09
Mar
-10
Mar
-11
Mar
-12
Mar
-13
Mar
-14
Mar
-15
Mar
-16
Mar
-17
E-Commerce Share of Total U.S Retail Sales
Source: U.S. Census Quarterly Retail E-Commerce Sales 2nd Quarter 2017, https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf
New York City
10
Some facts about NYC Sales Tax § Rate – 8.875 percent.
§ NYC sales tax rate is 4.5 percent. § NYS sales tax rate is 4.0 percent. § MCTD Sales tax rate 0.375 percent.
§ NYC exempts clothing under $110.
§ NYS enacted its “Amazon Law” in 2008 which stated that a seller of taxable property or services is presumed to be a vendor if the seller receives a commission on completed sales for referring customers to the seller by links on a website.
§ In 2010, New York State courts upheld the 2008 legislation.
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NYC Collects Nearly $7 billion on Taxable Sales of Over $150 billion
12
46 48
23 23
44 53
26
29
$6.9
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
99/00
00/01
01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11
11/12
12/13
13/14
14/15
15/16
16/17
NYC Retail Sales Tax ($ Billions) N
YC T
axab
le S
ales
($ B
illio
ns)
Retail Utility & Communications
Services All Other (Inc. Manu)
Sales Tax
Source(s): NYS OTPA, Taxable Sales Data State Fiscal Year (April to March). NYC Sales Tax OMB Fiscal Year (July to June)
Taxable Sales
13
-1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0%
Utility & Communications
Retail
Total
All Other (Inc. Manu)
Services
CAGR 99/00-16/17
CAGR 09/10-16/17
CAGR 13/14-16/17
Source(s): NYS OTPA, NYC OMB
NYC Taxable Sales Retail Trade
-
1
2
3
4
5
6
7
8
9
Clothing & Clothing
Accessories
Motor Vehicle & Parts
Food & Beverage
Nonstore Retailers
Miscellaneous Store Retailers
General Merchandise
Build Material & Garden Equip & Supplies
Health & Personal Care
Furniture & Home
Furnishings
Electronics & Appliance
Gasoline Stations
Sport Goods, Hobby, Music Instrument, &
Book
Billi
ons
SFY 13-14
SFY 14-15
SFY 15-16
SFY 16-17
14
Source(s): NYS OTPA, NYC OMB
NYC Taxable Sales Retail Trade
15
-10% -5% 0% 5% 10% 15% 20%
Sporting Goods, Hobby, Book and Music Stores
Electronics and Appliances
Retail Trade Total
Miscellaneous Retail
Clothing (excluding local sales)
Furniture and Home Furnishings
Health and Personal Care
Food and Beverage
Nonstore Retail
General Merchandise
Building Materials and Garden Equipment
Motor Vehicles and Parts
CAGR99/00-16/17
CAGR09/10-16/17
CAGR13/14-16/17
CAGRElectronicShopping
Source(s): NYS OTPA, NYC OMB
The recent decline in nonstore sales is attributable to direct selling establishment. Electronic shopping and mail order continues to rise.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Direct Selling Establishments* Electronic Shopping and Mail-Order Houses
Bill
ions
NYC Nonstore Retail 4-digit
SFY13 SFY14 SFY15 SFY16
16
Source(s): NYS OTPA, NYC OMB These establishments typically go to the customers' location rather than the customer coming to them (e.g., door-to-door sales, home parties). Examples of establishments in this industry are home delivery newspaper routes; home delivery of heating oil, liquefied petroleum (LP) gas, and other fuels
NYC Taxable Sales Services
-
5
10
15
20
25
Professional, Scientific, and Technical Services
Administrative and Support and Waste Management
and Remediation Services
Arts, Entertainment, and Recreation
Accommodation Food Services and Drinking Places
Other Services (inc. Health Care and Social Assistance)
Bill
ions
SFY 13-14 SFY 14-15 SFY 15-16 SFY 16-17
17
Source(s): NYS OTPA, NYC OMB
Taxable Services
18
-4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
Arts, Entertainment, and Recreation
Accommodation
Health Care & Other
Total
Professional, Scientific, and Technical
Administrative/Support Services
Food Services
CAGR 99/00-16/17
CAGR 09/10-16/17
CAGR 13/14-16/17
Source(s): NYS OTPA, NYC OMB
NYC Sales Tax Model
19
TotalSalesTax
LocalSpending VisitorSpending
NYCWageIncome NYCHotelTaxForecast
NYC Sales Tax (Common Rate & Base) & NYC Personal Income
20
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25 19
82
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Perc
ent c
hang
e (Y
/Y)
NYC Fiscal Year
NYC Sales Tax CRB NYC Wage Income Hotel Tax CRB
Log(NYC Sales Tax) = 3.5 + .89 Log (NYC Wage Income)
NYC Retail Trade Employment & Real Estate
21
Population growth has helped drive retail trade employment growth during the current expansion
282 272 268 267
273 281
287 295 300
292 303
314
328
340 350 352 349 351
7,700
7,800
7,900
8,000
8,100
8,200
8,300
8,400
8,500
8,600
200
220
240
260
280
300
320
340
360 20
00
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
f
Population in Thousands R
etai
l Tra
de E
mpl
oym
ent i
n Th
ousa
nds
Retail Trade Employment vs. Population
Retail Trade Population
Source(s): Census Bureau, U.S. BLS, NYC OMB Calendar Year
22
The recent decline in retail employment is concentrated in Manhattan
20
40
60
80
100
120
140
160
180
0
10
20
30
40
50
60
70
80
Manhattan Em
ployment in Thousands
Out
er-B
orou
gh E
mpl
oym
ent I
n Th
ousa
nds
Retail Trade Employment by Borough (4-qtr MA)
Brooklyn Bronx Queens Staten Island Manhattan (RHS)
Source(s): NYS DOL, NYC OMB
23
NYC Employment
24
-4% -2% 0% 2% 4% 6% 8% 10%
ClothingandClothingAccessories
Spor<ngGoods,Hobby,MusicalInstrument,andBookStores
Gasoline
ElectronicsandAppliance
FurnitureandHomeFurnishingStores
Total
MotorVehicleandPartsDealers
Miscellaneous
BuildingMaterial,GardenEquipment,andSupplies
FoodandBeverage
GeneralMerchandise
HealthandPersonalCare
NonstoreRetailers
CAGR99-16
CAGR09-16
CAGR13-16
Source(s): BLS, NYC OMB
Retail availability has risen throughout Manhattan
25
0%
5%
10%
15%
20%
25%
30%
35%
Availability Rate(%)
2015Q2 2017Q2
Source(s): Cushman & Wakefield, NYC OMB Note: Availability rate is the total amount of available space being marketed divided by the total inventory of space.
Conclusion § NYC Sales Tax has decelerated in the past few years, following robust
post recession growth. § The slowdown is largely due to moderate income growth. However, weak
visitor spending associated with a slowdown in the tourism industry has led to additional drag.
§ NYC is also seeing growth in the e-commerce sector. § The growth in e-commerce though appears to a substitution for
traditional brick and mortar stores. § As a result traditional retail employment in brick and mortar stores has
slowed, as has demand for retail stores in Manhattan. § Lastly, it is possible that another potential drag on sales tax is that the
increased competition from e-commerce has driven prices down.
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