HdL Companies Say California Sales Tax Returns Show Stronger Than Expected Growth in Q3 2021

BREA, Calif.–(BUSINESS WIRE)–Even the most optimistic forecast for Golden State sales tax filings hasn’t come close to what has materialized: an 18% rise in local one-cent sales and tax filings. usage from July to September 2021. The same quarter of 2020 marked the start of the pandemic recovery, with the following strong growth snowballing into recent results.

“We are finally seeing a strong comeback for restaurants and hotels, which has surprised some of us,” noted HdL Chairman and CEO Andy Nickerson. “This industry has arguably suffered the most from the pandemic, and because of this, many anticipated that its recovery would take much longer than it did. Summer led to a 47% increase in statewide sales tax, exceeding pre-pandemic amounts in 2019.”

As industry players await the return of foreign tourism to California, particularly to metropolitan areas, strong domestic travel is impacting various regions of the state, particularly Southern California and the Central Coast. .

Meanwhile, as auto dealers remain concerned about inventory shortages, sales of new and used vehicles posted solid gains of 16%. “As businesses, commuters and travelers have gotten back on the road with rising gas prices, gas stations and service stations have also seen a dramatic recovery,” Nickerson commented. Petrol stations and service stations saw a staggering 54% increase in tax revenue.

General consumer goods showed a steady recovery, led by retailers of clothing, jewelry and electronics/appliances. Large discount stores, especially those selling gasoline, exemplify the power of brick and mortar. Gains from countywide usage tax pools, however, slowed to 2%.

HdL determined the overall 18% one-cent sales and use tax hike by comparing performance this quarter to the same quarter in 2020, after adjusting for accounting anomalies and backlogs in the quarters. previous ones. The past two years have seen more anomalies than usual due to Governor Newsom’s executive orders allowing businesses to defer a portion of sales tax payments during the pandemic. Now that the program has expired, merchant remittances are more consistent, making cash inflows more representative of underlying economic activity.

“Possible headwinds in 2022 include pent-up demand for travel and experiences that could divert spending away from higher-priced taxable goods, fuel, merchandise and services. This will likely displace consumers’ disposable income, and expected interest rate hikes could lead to more expensive financing for automobiles, homes and consumer loans,” Nickerson concluded. “Public agencies will need to continue to evaluate their sales tax strategies, economic development tactics and revenue metrics to adapt.”

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About HDL companies

HdL Companies is dedicated to supporting local governments across the United States with revenue enhancement, technology, and consulting services that enable cities, counties, and special districts to better serve their constituents. Founded in 1983, HdL Companies’ global approach to revenue management is trusted by more than 500 local governments. The company has successfully recovered over $3 billion in revenue for agency clients. For more information, visit hdlcompanies.com.