Differential Governance Capacity and the COVID-19 Pandemic’s Impact on Sales Tax Collection: Evidence from Georgia Counties

This article focuses on the impact of the COVID-19 pandemic on the sales tax collections in Georgia counties across various levels of administrative governance capacity. We hypothesize that higher levels of governance leadership, policy regulation, and delivery capacity, as measured by a full-time economic developer, a planning commission and local government personnel, respectively, buffer against sale tax collection losses due to the pandemic. Our findings suggest sales tax collections for the top 33% of counties, in terms of retail earnings per capita, tourism earnings per capita, and e-commerce activity, while demonstrating some heterogeneities are not systematically impacted by prior governance capacity. Therefore, our results imply that governance capacity to administer the sales tax might not interfere in sales tax collections during a turbulent time, such as the COVID-19 pandemic, given that collections are streamlined and centralized at the state level, compared to other local governments globally.