Lockdowns Having Less Impact on Tax Revenue than Expected


By Contributing Author

It is to be expected for some impacts on the economy to occur during a pandemic, especially when it is followed by lockdowns and quarantine. But, opposite to most predictions, tax revenue for both local, state, and national administrations don’t seem to be affected as much.

Additionally, trade has not diminished significantly but rather shifted to different markets and products. While the personal service industry is working at a loss for the moment, on a broader economic scale this loss is compensated by online entertainment and home-delivery of products through platforms like Amazon.

Finally, the widely criticized move of broad individual financial stimuli has proven to be beneficial for both the individuals affected by the lockdown and the economy at large, including smaller and larger companies in the same way.

Down but not Out

For any investor, the sight of empty streets and closed shops are instant reasons for concerns. And, with the reduction in economic activity and public revenue, we should always expect decrees in both the quality and quantity of public services.

But, if we were able to see the bits flowing through the air and underground optic cables, we will see that the cities and towns worldwide are actually bristling with activity.

Also, the move towards online sales and shipping allows for lower overhead and costs, leaving a lot of disposable income to seep away to other products and services. This fact has not only diversified the market when it comes to the demand but also increased the frequency of sales.

Online is Compensating for Losses

Although many novice investors see the internet as just a single IT or eMarketing sector, it is much more than that. Many of the things that exist on the street have their counterparts online.

And, the fact that you are staying at home doesn’t mean that you won’t have an occasion for people to see you. Fashion and makeup are as viable industries as ever.

Also, there is a whole set of novel industries that have risen to compensate for the fact that people are not going outside as much as they used to. Online gaming has surpassed all expectations when it comes to the number of users and the amount of time and money they are willing to invest in this kind of entertainment.

Online gambling and wagers are also on the rise and have exploded in popularity over the last few months.

Apparel and Product Shipping

Buying clothes has seen a slight drop during the lockdown, but not as big as one might expect. People still care about what they wear, and the influence of social media means that many still want to look presentable to others, even though others might be half the planet away.

Product shipping is even on the rise, with smaller manufacturers being the primary beneficiary of the market share increase. And, because these manufacturers usually pay more taxes compared to sales from their larger competitors, the funds of local administrations where this is happening are experiencing a boom.

Digital Entertainment and Online Gambling

Video games have come a long way in just the last decade. From niche entertainment for those interested in tech, it has become a mass consumer product that is used frequently by billions. And the proliferation of smartphones has made this market even larger, with everyone logging on to some phone game app almost daily.

But, for local budgets, an even bigger factor is online gambling. It seems like there are new online casino operators popping up daily, and with more than enough demand to be spread around.

Online gambling operators have upped their game as well, providing a wider array of services than ever. Aside from traditional casino games, there are now slots and spinners coming in all sorts of shapes and sizes. Because of this diversity, the number of players is predicted to rise in the future even more.

Increased Basic Spending

Finally, a lot of investors and companies have realized that the average consumer is focusing especially on the basics. Consumer spending on food is on the rise both nominal and per capita, due to several factors.

Primarily, most people are concerned with their health and believe that it is a good investment to buy better, albeit more expensive, foods and supplements for them and their children. This also includes a greater diversity and openness to international cuisine, as well as delivery services with complete and wholesome meals.