October revenue numbers continued a healthy overall trend showing a 5.4 percent increase for the month for a total contribution to the treasury of $1.3 billion.
Individual income taxes had another strong month coming in at a 9.8 percent increase. The increase of $62.4 million came from an increase in individual withholding payments of $52.5 million and individual income tax return payments increasing by $10.5 million.
Net sales tax collections to the state continued to be lethargic at 2.3 percent. We will look at recent trends in sales tax collections later in the column.
Combined motor fuel taxes were up 10.5 percent or about $7.8 million for the month. Both sales taxes on fuel and excise taxes were positive for the month.
Corporate taxes were down by some $4.2 million for the month. We will look deeper into this category in the year to date section.
Tobacco faxes were up slightly at 0.3 percent and alcohol taxes were negative at -6.5 percent. More on this category later.
Year to date numbers – some bothersome, some positive trends
With one third of the year gone by, there is enough data to get a good feel as to how the state is progressing. It is also a good time to examine trends, particularly as the fall has brought financial and business uncertainty. It is a good idea to see if all the parts of the state system are pulling in the same direction.
Year to date, total revenues are up 6.85 percent on an increase of $339.2 million on collections of $5.3 billion. When we use our adjustment factor recognizing the one month increase in refunds in July of 2010, our “true” growth number is 4.94 percent — still very encouraging. Leading the way by far is the individual income tax category, about 50 percent of state revenues, showing an 11.1 percent increase or 7.56 percent if adjusted as above. This income tax category totals $2.875 billion year to date or an increase of $286 million.
What is driving this increase? Looking inside those numbers we see healthy increases in business activity. Individual withholding payments, an indicator of business activity, are up $135 million or 5.2 percent so far this year. Individual income tax assessments are up $13.5 million or 39.4 percent. All other individual tax categories are up a total of 39.4 percent.
So, it does appear the increase in state revenues is being driven by employment and by income and not necessarily by sales taxes as we will see next.
Sales tax collections-Categories trending only slightly up
Net sales tax collections to the state have trended lower all year since June. Year to date, net sales taxes are only showing a 2.3 percent increase over the same four months last year. So far the gain in this category is only $48.3 million for the year on total collections of $1.75 billion for the four months.
Here are the top sales tax categories and the individual increase over the same four months of FY2011:
Category Percent increase
Wholesale trade 16.2
Automotive 4.3
Retail trade 7.4
Manufacturing 4.3
Food/groceries 7.0
Home furnishings 2.8
Utilities/energy 6.1
Accommodations 2.0
Other services 5.8
The only two negative categories were construction at -13.2 percent and miscellaneous services at -0.26 percent. All of the factors involved in sales tax collections — gross collections and distributions to local governments — appear to be level, so the only conclusion is that retail sales are little more than flat at the 2.8 percent level YTD.
Motor fuel taxes are up a combined 5.8 percent or an $18.6 million increase for the year. If this rate keeps up, funds for roads and bridges will go up by over $50 million. Of course, even though the last sales tax increase on fuel was suspended, due to the high price of gasoline; the sales tax rate is 12.9 cents per gallon versus the .104 cents a year ago.
Hard to find any positives in the corporate tax category. Collections are down $23.5 million or -21.2 pecent YTD. The largest part of that category is refunds which are up after four months by $43.5 million or 46.5 percent. Corporate tax payments were only up $13 million, so there was more going out than coming in.
YTD, tobacco tax collections are up 17.5 percent or $11.5 million, which probably comes from two new large wholesale purchasers of tobacco products, one from a neighboring state.
Hard to figure what is going on in the alcoholic beverages category and it makes me want to inquire about national and regional trends. But malt beverages, beer, have been declining in taxes collected for seven months, since April — down some $17.75 million or 33.5 percent during that period. Paradoxically both liquor and wine excise taxes have remained “virtually flat” according to the Revenue Department.
So, here is the billion dollar question: Is the state growing economically like the growing withholding and income tax collections or is the state lurching along like the lethargic sales tax collections growth?
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
