State revenue collections totaled 6.7 percent in July and continued some positive trends from the past months. Total revenues were $1.41 billion, showing a gain of $88.4 million over July 2012. The two gains that made up the increase were in individual income taxes and the new title fee replacing income taxes on new automobiles.

Individual income taxes, which includes withholding taxes, quarterly and other income tax payments and most small business filings, totaled $758.3 million for the month, an increase of $60.2 million or 8.6 percent. Positives within that category included withholding payments, up 7.8 percent or $55.5 million and refunds decreasing by 4.2 percent or $1.75 million. Other categories were up about $3 million, all positive signs indicating increased economic activity.

The other large category of revenue, net state sales taxes, which accounts for about one-third of all state revenues, showed a decline of 6.6 percent or $30.2 million. But when combined with the increase in title fees collected by the state in lieu of sales taxes, the net total shows an increase of 6.6 percent or $31.9 million.

Motor fuel collections were positive for July, with excise taxes increasing 10 percent and fuel sales taxes 11.2 percent for a total of 10.7 percent or $8.5 million for the month.

Corporate taxes showed a small decrease of $3.9 million or -21.8 percent. Quarterly reports seem more indicative of trends here.

As mentioned earlier, tag and title fees increased $62.1 million. Tobacco taxes were up $9.5 million but alcoholic beverages declined by 7 percent or $1.1 million.

Trends
Even though the fiscal year is only one month old, we can examine the trends of the past months to see where the economy and state revenues are heading.

Individual income taxes from January through July were up on average 8.8 percent. Taking into account the phenomenon in April of taxpayers paying ahead to take advantage of lower tax rates for 2012, reducing the  huge April gain to 13 percent or the same increase as FY12 over FY11, the increase from January through July still totals 6.7 percent. So the trends so far this calendar year are very encouraging.

Notwithstanding that month, there has been steady growth for the fiscal year ending in June at 7.5 percent and July coming in at 8.6 percent growth. Withholding payments totaled an increase of $354 million for FY13 and July at a positive $55.5 million or 7.8 percent follows that trend. Tax refunds were up slightly in FY13 at $60 million or 2.9 percent but down in July at 4.2 percent or $1.7 million.

Sales taxes should reflect title fees
As “murky” as sales tax collections have been prior to the implementation of the title fee, there is a very positive trend developing that becomes evident when you combine the net sales tax figures with the title fee totals. It is not supposition to presume the quadrupled increase in title fees must be laid to the new automobile title fee now being collected in lieu of sales taxes on new automobiles ... as well as sales of used cars now including casual sales. This is evident because the total category of title/tags fluctuated around $25,000 from October to June in 2012, a year ago. Since the title fee began to be collected in March, and allowing for a longer turn-in time the first months, the numbers have almost quadrupled, showing $47.4 million for April, $86 million for May, $87 million for June and $83.5 million for July. So that large an increase has to be attributed to new car sales increases and used car sales as well.

And if you believe what some counties claim, that the easier agriculture sales tax exemption process is reducing collections in this category, then this net increase in sales taxes is even more significant.  No one knows for sure how much the loss of sales tax on energy in manufacturing and agriculture is having, but there has to be some reduction in utility collections. But those numbers were apparently not available at the fiscal year’s end report.

So, net sales tax collections and title fee increases, when combined, the resulting increase has ranged over 6 percent for May, June and July. Very significant recalling the net sales tax collections hovering around 1 percent or less before the title fee started in March.

I may be reached at
234 State Capitol, Atlanta, GA 30334
(404) 656-5038 (phone)
(404) 657-7094 (fax)
E-mail at Jack.Hill@senate.ga.gov
Or call toll-free at
1-800-367-3334 day or night
Reidsville office: (912) 557-3811