New York City’s tax revenues declined about 1 percent in the past few months, reversing a trend of continuous growth since 2012. And a choppy real estate market is a major culprit.
Between April and August, year-over-year collections from real estate transaction taxes fell 9.7 percent while business taxes decreased by 26.1 percent, according to City Council data. Revenue from personal income and sales taxes also declined, but because of sky-high land values, revenue from property taxes rose.
A big factor in the slowdown is the cooling investment sales market. In July, an analysis by The Real Deal found that Manhattan, Brooklyn, Queens and the Bronx saw a total $31.6 billion in investment sales over the first six months of the year — a 16 percent drop compared to the same period in 2015. The number of transactions also fell to 2,938, a 24 percent drop.
The drop in tax income is raising concerns about the city’s budget, which has risen sharply under Mayor Bill de Blasio from $70 billion in 2014 to $82 billion. It’s expected to be a topic of debate when the council reviews de Blasio’s preliminary budget for the next fiscal year.
Council budget officials say the city remains in strong fiscal shape, compared with other cities nationwide, the Wall Street Journal reported.
The Journal noted that weaker corporate and bank profits as well as a contraction in retail hiring were factors in the lackluster tax collection figures. [WSJ] — Chava Gourarie