Poster #55 - Grocery Taxes and Local Government Revenue Recovery

• In Event: Saturday Poster Luncheon

Abstract

The retail trade sector was among the most severely affected industries during the COVID-19 pandemic and the associated government-mandated shutdowns, with retailers of non-essential goods and services experiencing the greatest disruptions. Beyond the immediate revenue losses in the retail sector, emerging research suggests that states that exempt groceries faced more pronounced economic challenges. This study examines the role of grocery taxes in shaping the recovery trajectory of local governments in Colorado following the COVID-19-induced recession. Colorado presents a unique case due to its policy structure, which allows municipalities the discretion to tax groceries and at what rate, thereby introducing endogenous variation in local fiscal policy. Drawing on data from the Colorado Department of Revenue and the American Community Survey, this research employs time-to-event analysis to assess the relationship between grocery tax policy and the speed of local economic recovery. The findings contribute to the literature on fiscal resilience by offering insights into how local governments can mitigate revenue volatility and enhance financial sustainability in the face of economic shocks.

Author

• Shihao Dai, University of Colorado Denver
  Presenting Author