Income tax payments boost state revenue in April

by The City Wire staff ([email protected]) 98 views 

Arkansas tax collections continue to move in the right direction, with year-to-date numbers up almost 5% thanks in large part to an April shift with income tax payments.

For the first 10 months of Arkansas’ fiscal year (July 2012-Apr. 2013), total tax collections are $5.149 billion, up 4.9% above the same period in the previous year, and above forecast by 2.6%.

The Arkansas Department of Finance & Administration reported Thursday (May 2) that April revenue was $817.4 million, up $99.2 million compared to April 2012, and 12.1% above the budget forecast.

“Results were mainly driven by high growth in individual income tax,” John Shelnutt, head of the Department of Finance and Administration’s Economic Analysis & Tax Research division, said in the report. “Much of the increase in recent collections represents income shifted to Tax Year (TY) 2012 and paid in FY 2013 revenue. Larger than anticipated payments with filing extensions and returns received in April for Tax Year 2012 resulted from taxpayer strategy and improved business earnings. Other states and the IRS are reporting similar results this month.”

CONSUMER SPENDING DECLINE
However, April did not bring good news with respect to consumer spending. April sales and use tax collections totaled $174.2 million, down 2.5% compared to April 2012, and 6.5% below the revenue forecast.

“A variety of factors relate to ongoing weakness in sales and use tax receipts, including slow job and income growth, low inflation, and the diversion effect on taxable sales from elevated motor fuel costs to consumers in recent months,” Shelnutt noted in the report.

Arkansas two largest revenue sources are individual income tax collections and sales and use tax collections.

Year-to-date individual income tax collections total $2.657 billion, 9.1% higher than the 2012 period. The revenues were 6.5% above forecast. Individual income tax collections during April were $568.3 million, up 21.9% compared to 2012.

Sales and use tax collections for the fiscal year total $1.756 billion, up just 0.3%, and 1.8% below forecast.

The income tax refunds for the first 10 months of the fiscal year total $432 million, down 1.8% – or $7.9 million – compared to the prior-year period, and 6.1% below forecast. During April, the refunds totaled $110.5 million, up 11.3% compared to April 2012, and up 6.4% above forecast.

Year-to-date corporate income taxes totaled $336.7 million, up 1.3% from the 2012 year-to-date period, and below the forecast by $1.4 million.

OTHER TAX COLLECTIONS
Alcoholic beverage
July 2012 – Apr. 2013: $40.9 million
July 2011 – Apr. 2012: $39.7 million

Games of skill
July 2012 – Apr. 2013: $29.3 million
July 2011 – Apr. 2012: $22.3 million

Tobacco
July 2012 – Apr. 2013: $188.2 million
July 2011 – Apr. 2012: $198.4 million

Insurance
July 2012 – Apr. 2013: $64 million
July 2011 – Apr. 2012: $64.9 million

COLLECTIONS HISTORY
Fiscal year 2012 marked the second year of year-over-year gains. Arkansas tax collections reversed a negative two-year slide in the 2011 fiscal year, with collections up 4.5% in the July 2010-June 2011 period.

State tax collections for fiscal year 2011 totaled $5.673 billion, up 4.5% above the $5.43 billion in the 2010 period. Total state revenue of $5.43 billion in fiscal year 2010 was 2.4% below the previous fiscal year and marked the second consecutive year of revenue decline.

The biggest declines in the 2009 and 2010 fiscal years were with individual income tax collections and sales and use tax collections.