Category Archives: Sales Tax
April 27, 2015 Tax Commission’s revenue report describes lightly weakening, but overall strong, revenue picture
The Tax Commission’s 9-month revenue report came out yesterday described a picture of slightly weakening, but overall still strong revenues.
State sales tax (cumulative, fiscal year 2015) growth slipped from 4.5% to 3.8% for the first 9 months of FY2015. For the month, state sales taxes fell 2.7%. But we note that the sales tax earmark for the Transportation Fund’s” 30% Sales Growth Diversion” rose 85.1%, $12.4 million this month, to $96.4 million during the first 9 months (compared to $84 million last year).
Indicating continued strong growth in Utah wages, the State’s withholding tax is up 6.2% during the first 9 months of FY2015. Overall, individual income taxes are up 7.6% this year compared to the 5% forecast made in February. Corporate income taxes are up 22.5% in the first 9 months, compared to the February forecast of 18.8%.
Motor fuel taxes are up nearly 3% in the first 9 months, indicating increased driving due to lower gasoline prices. This should help our B&C distributions.
Finally, the local 1% sales tax was up 2.7% for the month and 4.0% for the first 9 months of the State’s fiscal year at $389.4 million (this is found in a detailed report not below). The County 0.25% tax is up 3.6% for the first 9 months of FY2015.
The Tax Commission distributed $37.73 million to Utah’s cities, towns and counties for the 1% local sales tax last week, up 1.7% from last year’s $37.11 million. These monies represent mainly sales from January 2015 large, monthly filers. At first glance, the 1.7% increase appears low, but coupled with the 13% gain from last month’s 4th quarter sales and the 3.7% gain in the January distribution, the last three months’ gain equals a healthy 6.8%. It is also possible that some of January’s transactions were counted last month, which lowered January’s gain.
Retail sales across the U.S. rose 3.2% in January, and new light-vehicle sales rose from 15.2 million last year to 16.6 million in January 2015, up 9.2%.
What’s interesting with this month’s distribution is the fact that while Salt Lake and Weber counties grew along with the statewide growth of 1.7%, Davis County’s distribution rose 5.1%, implying an 8.5% sales gain and Utah County’s distribution rose 3.9%, implying a 6.2% sales increase.
In Salt Lake County, double-digit gains in Draper and South Jordan were almost offset by small declines in Sandy, Holladay and Midvale. Salt Lake City’s distribution was up only 0.5%, but its 3-month average gain was still up 6%.
Davis County gains ranged from 2.3% in Kaysville to 16.3% in Farmington, while its largest cities, Bountiful and Layton, scored 5.1% and 4.2% increases, respectively.
The Tax Commission distributed $55.79 million to cities and counties for the 1% local sales tax in February 2015, a 13.0% increase over last February’s $49.38 million (Figure 1). These monies are primarily from sales in December 2014, but also include monies from fourth quarter and calendar year returns. The 13% gain in the February distribution pushes up the year-to-date gain for the first half of FY2014-15 to 7.1%.
In contrast, nationwide retailers’ sales rose 4.3% in December 2014 to $455.7 billion, according to the U.S. Bureau of the Census through FRB St. Louis (Figure 2).
Our models estimated a baseline forecast for CY2015 taxable sales at 6.8% growth (made last October). Our pessimistic scenario indicated 2.7% growth for CY2015.
Five out of the eight largest cities in Salt Lake County distributions rose in double-digits, including Salt Lake City (14.1%), West Valley (16.6%), Midvale (15%), Draper (24.2%) and South Jordan (17.5%). Draper’s distribution reached $1 million for the first time.
All of the large cities we survey in Utah and Weber counties’ distributions rose more than 12%. Lehi reached the million dollar mark too for the first time.
In Davis county, Layton’s distribution rose 12.2% and Farmington’s rose almost 21%.
Park City’s distribution rose almost 25%, suggesting sales rose nearly 37%.
Figure 1. Select 1% Sales Tax Distributions
Figure 2. U.S. Retail Sales (Federal Reserve Bank, St. Louis)
Figure 3. Utah 1% Sales Tax Distributions
Following four months of 2% to 4% growth, November and now December’s 1% sales tax distribution escalated to 7.4% and 8.2%, respectively. In December, the Tax Commission distributed $39.88 million compared to $36.9 million in 2013. December’s 8.2% growth, representing sales from October, brings year-to-date growth for Utah’s cities up to 6.1% during the first four months of fiscal year 2014-15.
In the U.S. sales from retailers rose 4.3% in November. Utah’s improving performance may be pushed by improving jobs and in some sectors better wage growth. It also may be attributed to the poor performance in 2013 as the federal government began to cut back on new contracts and laying off workers. In addition, copper mining has returned to pre-landslide production levels. In north Utah county, software companies are clearly expanding investment and commercial construction. This is partially reflected in Lehi’s computed sales increase of 20.7% for October.
Have a Happy New Year – this should last for a few more months,
Cities and towns in Utah receive a 1% sales tax that is distributed by the state using a formula based 50% on population and 50% on point-of-sale. The Governor’s Office of Management and Budget puts forth population estimates each year that affect the distribution of of this tax, and ULCT economist Doug Macdonald has put together his estimate on how each municipality will be affected by changes in population in both PDF and EXCEL formats. Contact Doug at email@example.com with any questions.
The September distribution came out a few weeks ago showing that the 1% local sales tax grew 4.4% from a year earlier at $40.35 million. The growth rate for the last three months is up 3.3%. Prospects for 4% growth should continue for the rest of the calendar year despite a recent downturn in new home building. Employment growth between 3% and 4% appears imminent and the average wage is gaining ground. Across the U.S., retail sales made a solid 5% gain in August.
Salt Lake City, the largest city in the state, recorded a 3.8% gain in the September distribution, representing sales mostly in July. Similarly, Murray and West Jordan saw 3% gains. The distributions in Draper and South Jordan of near 11% suggest that their direct sales may have increased 18.5% and 16.9%, respectively.
Ogden’s and Provo’s distribution were up 6.2% and 5.7%, respectively. Meanwhile the near 12% gain in Lehi reflects the fact that direct sales must have increased almost 19%.
Excepting Farmington where the distribution increased 15%, distributions across Davis County increased from 2.5% (Bountiful) to 5.5% (Clearfield).
Park City’s distribution increased 17% and St. George’s increased 5.1% in September.