The Utah Taxpayer has a bizarre post. They say that sales tax structures create a false economy where cities prefer to have retail stores move in than industy. This helps explain why there is so much RDA money sunk into building Malls and Walmarts, while real industry is left to sprawl on its own on the outskirts of town. The industry may bring in more money into the community. The retail store brings in sales tax directly into the pocket of the city.
This weird economy leads to strange behavior where cities give incentives to retail, and throw up zoning challenges to manufacturing.
The post has a great quote: "Retail happens on its own. It does not need to be subsidized."
To a large extent, retail has a zero sum gain. Pulling a new store into the Salt Lake Valley really doesn't bring in that much new money. The new store might shuffle sales tax dollars between the municipalities in the valley, but does not bring in much new wealth.
Now, I do understand that not all retail is a zero sum gain. Local First notes that locally owned stores tend to keep a higher percentage of consumer money in town because both salaries and profits stay in the community.
A city planner, however, who is only looking at sales tax revenue may not take into the account the positive effects of local ownership. Sales tax from a chain store looks just like sales tax from a locally owned business. City planners just looking at sales tax would see that local stores are already there. So, he-she-or-it would be tempted to spend some of the taxes collected from local businesses to attract in remotely owned competition. Every city planner knows that the city that gets the Walmart gets the sales tax revenue.