City sales tax revenue reaches record high

All those pennies sure add up. The City of Carrington collected more than $900,000 in revenue last year from its 2 percent city sales tax.

The $935,833.04 total is a record high for the Central City, eclipsing last year's collections by about $29,000.

The dollars are split among three funds: the city's general, infrastructure and economic development funds.

Part of the growth in collections over the past few years is a result of the landmark South Dakota v. Wayfair Supreme Court case. The high court ruled in 2018 that states may require remote sellers to pay state and local sales taxes.

Remote sellers are defined as businesses who sell products to consumers via the internet, mail order or telephone without having a physical presence in the state. The Act applies only to sellers that, on an annual basis, deliver more than $100,000 of goods or services into the State or engage in 200 or more separate transactions for the delivery of goods or services into the State.

According to data from the N.D. State Tax Commissioner, the City of Carrington collected $66,547 in sales tax from remote sellers in the first three quarters of last year. Data for the fourth quarter will not be released until April. That number has ballooned in the past three years, from $4,072 in the first quarter of 2019 (when the state began reporting).

While the added sales tax is a boon to the city coffers, it represents retail revenue that has left the community. Every $1,000 collected in remote sales tax revenue represents a $50,000 loss to the city's economy, as people buy goods and services elsewhere. Therefore, during the first three quarters of 2021, more than $3 million in purchases by local residents were made to remote sellers. That $3 million would go a lot further in our community if spent locally.

According to the U.S. Small Business Administration, money spent at local businesses generates 3.5 times more wealth for the local economy than purchases made at chain-owned businesses.

While it wouldn't be realistic to expect that local residents purchase all of their goods here in Carrington, consider that even if one-third of that money stays local, $1 million in revenue would generate up to $3.5 million in wealth in our local economy.