Local businesses are what everyone who wants a successful local business environment should be supporting. The reasons for shopping locally are varied. Local businesses tend to have made an investment in the community, owners pay property taxes, businesses support local fund raisers and back local sports teams, and travel time is minimal for resident shoppers. These are very important reasons to shop locally.
When we shop locally, within the Village of Croton for instance, we pay sales tax on many items just as we do on purchases when we shop elsewhere in the County. However, a recent conversation with a local resident indicated that the person believed that shopping locally meant that sales tax charged as part of a sale in the Village would be returned to the Village as revenue. This is only partially true.
Sales tax revenue returned to the village is based on the population
of the Village, not on the amount of sales tax revenue raised in the
Village. The supposed attraction of having a large retail business in the Village, such as a Home Depot or Staples or a chain restaurant, is based partially on the idea that the large of amount of sales tax they generate would be returned to the Village. This is incorrect.
For most localities in Westchester County, there is a standard sales tax of 7.375% (some cities have a higher sales tax). This sales tax is enabled by NYS law on a
county by county basis (Westchester County Spending Limitation Act). Of that 7.375% of every dollar spent, 4% of that dollar goes to the State. Additionally, .375% of each dollar spent goes to the Metropolitan Transit Authority. Of
the remaining 3% of a dollar spent on a transaction, 2% goes to Westchester County and 1% is divided with .25% going to school districts and .75% going to local municipalities on a per capita basis. This means that no matter how much sales tax is actually collected by the State in a municipality in Westchester County, the .75% of each dollar spent that is returned to that municipality out of the 7.375% collected is proportional to the population of that locality.
This is not to say that sales tax revenue is unimportant. It is very important. In the Village of Croton, it represents just short of a million dollars a year. This actually represents the third largest amount of revenue in the Village of Croton after property taxes and income from the rail station parking lot. However, no matter how much sales tax our village generates, our return will be a per capita amount of the.75% of each dollar spent, not the entire amount generated in the Village.
We need to keep shopping locally for the reasons stated
initially – convenience, conservation of car fuel, business support of local teams and volunteer efforts. But also, and very importantly, businesses that thrive will invest in themselves which, in turn, adds to increased property values. These are the true reasons for shopping locally.