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If stores keep closing, why are sales tax collections up?

Payless ShoeSource closed its more than 2,000 locations across the country last year. Gymboree closed 800 stores. DressBarn closed 650. Together, Chico's, GameStop and others closed thousands more.

Retailer closings happen so frequently that "retail apocalypse" is a household phrase.

But if brick-and-mortars are closing so swiftly, why are sales tax collections up?

Western New York collected 3.9% more sales tax last year than it did in 2018, according to a report released by the state Comptroller's Office last week. Sales tax collections increased in every Western New York county, and in all but three counties in New York State.

Overall, sales tax collections increased by 4.7% statewide, amounting to $18.3 billion.

So what gives? A few things.

Amazon and other large online retailers are now required to collect local and state sales tax on purchases with third-party sellers made by customers in New York. New laws concerning internet sales tax collection went into effect in June, and pertain to vendors that do more than 100 transactions and $500,000 in sales in the state. Before that, big online merchants were exempt from collecting sales tax in the state.

The increase in sales tax was most prominent during the later half of the year, when the new mandates went into effect. Sales tax collection increased overall in the state by about 3% in the first and second quarters of 2019. The increase jumped to 6.3% growth in the third quarter, then dropped slightly to 5.6% growth in the fourth quarter.

The strong job market and slight wage growth in the region likely helped, too, the comptroller noted.

Though hiring has slowed in Buffalo Niagara, and the unemployment rate has been gradually increasing, the economy remained strong in 2019. Weekly wages grew modestly by 3% during the first half of the year, just above the rate of inflation, according to the Bureau of Labor Statistics. Consumer spending was stable across the state, even though consumer confidence chilled slightly.

While sales tax collections in Western New York increased overall for the year, its pace of growth was slower than in 2018, according to the report. Though sales tax grew by 3.9% last year, it had grown by 4.8% year over year in 2018.

In fact, all but two regions in the state – Mid-Hudson and the Finger Lakes – experienced a slower rate of growth.

The Comptroller's Office attributed some of that overall drag to a 5.7% decline in gas prices. Fuel prices dropped last year for the first time since 2016.

Why the unemployment rate keeps rising in Buffalo Niagara

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