Tax revenues continue on positive trend

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Tax revenues continue on positive trend

Wed, 08/21/2019 - 12:38pm -- tim

Vermont Business Magazine Tax revenues are still coming in largely above targets, continuing their strong showing from the spring. The personal income tax, the most important General Fund revenue source, was up nearly 7 percent over expectations. Meanwhile the corporate tax, which tends to spike, was almost 70 percent ahead of targets. Secretary of Administration Susanne Young released Vermont’s Revenue Results for July 2019 today.

“Overall, General and Transportation Fund revenue receipts in July were above target, while the Education Fund is below target,” stated Secretary Young. “In the aggregate, the three funds experienced a positive gain over the month’s consensus cash flow target, as well as on a year-over-year basis after adjusting for 2019 legislative changes. With only one month of revenue collections, however, it is too early to draw any conclusions about full-year performance.”

While income revenue and the Rooms & Meals tax continue to perform well other taxes still lag.

The sales tax failed to meet targets again -3.34 percent). For several years the sales tax has suffered from online sales and even recent Amazon tax collections have not improved its fortunes. The poor sales tax performance dragged the Education Fund below targets.

The gasoline tax (-4.32 percent) is another tax that often trails behind its targets, which is generally blamed on more fuel efficient vehicles, including electric vehicles. But motor vehicle sales (-1.54 percent) have also lagged, suggesting consumers are buying fewer new cars and/or less expensive cars.

In all, General Fund revenues collected for the month totaled $113.78 million, or $5.18 million (+4.77%) above the monthly consensus revenue target. This monthly target corresponds to the July portion of the annual consensus revenue forecast adopted by the Emergency Board on July 29, 2019, according to Secretary of Administration Susanne Young. In particular, personal income tax and corporate income tax exceed their targets. Because July marks the first month of Fiscal Year 2020, monthly and cumulative totals are the same.

The Transportation Fund collected $21.25 million for the month, $0.18 million (+0.86%) above its $21.07 million target. The Education Fund collected $47.05 million for the month, or -$1.36 million (-2.82%) below the target of $48.41 million. The primary source of under-performance in the Education Fund was the sales and use tax collection.

Adjusting for redirection of certain health care-related taxes under Act 6 of 2019, for comparison purposes only, in the accompanying General Fund tables, the revenues for July 2019 (FY 2020) represent changes of 7.52%, -5.67%, and 4.44% for the General Fund, Transportation Fund, and Education Fund, respectively, from July 2018 (FY 2019).