A Structural Change in the Power to Tax: The COVID-19 Pandemic’s Impact on Sales Tax Collections across Georgia Counties

Felipe A. Lozano-Rojas and Michelle L. Lofton

Municipal Finance Journal, 2023, vol. 44, issue 1, 3 - 43

Abstract: Local option sales taxes are important revenue generators for local governments. Yet the COVID-19 pandemic altered their tax bases. This article focuses on the pandemic’s impact on sales tax collections in Georgia counties with varying exposure to traditional (retail and tourism) and modern (e-commerce) collection methods. It hypothesizes that counties with higher reliance on traditional methods were negatively affected, while more reliance on modern methods benefited counties with increased collections. The findings suggest that the highest decile counties, in terms of retail and tourism earnings per capita, experienced the most decline in sales tax revenues per capita, at about 14% and 12%, respectively. Yet, high decile counties, in terms of e-commerce measured as broadband access, experienced the most increase in sales tax revenues per capita, at about 8.5%. These persistent effects demonstrate that counties constrained by traditional methods, but with accelerated e-commerce access, altered their structural power to tax.

Date: 2023
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