‘High growth’ in sales tax collections pushes Arkansas tax revenue up 6.4%

If the economy is slowing, no one told Arkansas businesses and consumers. In the December report, fiscal year-to-date Arkansas tax revenue totaled $4.145 billion, up 6.4% compared with the same period in 2021 and 3.3% above forecast.

Individual income tax revenue in the first six months of the fiscal year (July-December) was $1.768 billion, up 4.3% compared with the same period in 2021 and 1.9% above the budget forecast, according to Wednesday’s (Jan. 4) report from the Arkansas Department of Finance and Administration (DFA). The report said the net available revenue – surplus – at the end of the first six months was $125.2 million.

Sales and use tax revenue in the first six months was $1.691 billion, up 8.7% compared with the same period in 2021 and up 1.2% above the forecast. Corporate income tax revenue in the first six months was $406.9 million, up $34.9 million compared to the same period in 2021 and 20.6% million above the forecast.

“Monthly revenue results were above forecast in all major collection categories. … Most major reporting sectors of Sales Tax displayed high growth over the prior year, reflecting continuing economic expansion in many sectors,” John Shelnutt, DFA administrator of economic and tax research, noted in Wednesday’s report. “Motor vehicle sales tax collections were up 7.8 percent from year-ago December.”

December revenue was $773.2 million, up 7.4% compared with December 2021 and 17.9% above forecast. December individual income tax revenue was $288.9 million, up 5.3% compared to December 2021 and 12.2% above forecast. December sales and use tax was $289.6 million, up 5.4% compared with December 2021 and 3.1% above forecast. Corporate income tax revenue in December was $151.5 million, up $14.6 million compared with December 2021 and an impressive $66.3 million above forecast.

“Income Tax payments reflecting Tax Year 2022 liabilities pushed Corporate and Individual Income Tax categories well above forecast,” Larry Walther, Secretary of the Arkansas Department of Finance and Administration, said in a statement. “2022 was a very good year in Arkansas. Sales Tax collection growth remained elevated in December and over the first six months of fiscal year 2023.”

Inflation continues to be an issue despite a decline in inflation data. The October Consumer Price Index, posted on Dec. 13 by the U.S. Bureau of Labor Statistics, reported that all indexed items were up 7.1% compared with December 2021. The index was lower than 7.7% in the November CPI report.

Total tax revenue in fiscal year 2022 (July 2021-June 2022) was $8.773 billion, up 8% – or $651.2 million – compared with a robust fiscal year 2021 in which the tax surplus was $945.7 million. State tax coffers ended the previous fiscal year in June with a $1.62 billion surplus.

OTHER REVENUE SOURCES
Tobacco
July-December 2022: $104.3 million
July-December 2021: $113.5 million

Alcoholic beverages
July-December 2022: $37.1 million
July-December 2021: $36.2 million

Games of skill
July-December 2022: $23.2 million
July-December 2021: $20.8 million

Insurance
July-December 2022: $53 million
July-December 2021: $49.6 million