Government tax revenues on the upswing
Fourth quarter 2009 tax revenue for state and local governments, as compared with fourth quarter 2008, was up 0.76 percent, marking the first quarter of positive revenue growth in five quarters, according to a U.S. Census Bureau report. Tax revenue for the quarter totaled $360.1 billion compared with $357.4 billion reported for the fourth quarter 2008.
Of the four largest tax categories, property tax and corporate income tax revenues increased in the fourth quarter, while general sales tax and individual income tax revenues continued to decline, though the declines are not as sharp as they have been for the past four quarters.
Total property tax revenue increased 5.8 percent in the fourth quarter of 2009 to $169.8 billion from $160.5 billion in the fourth quarter of 2008.
Corporate income tax growth was positive for the latest quarter, up 3.4 percent, after showing declines in seven of the past nine quarters. Fourth quarter 2009 revenue was $9.1 billion, up from $8.8 billion in the fourth quarter of 2008.
On the minus side, individual income tax growth was negative for the fifth quarter in a row. Revenue dropped 4.7 percent from the same quarter the prior year. General sales tax growth was, likewise, negative 2.8 percent, leading to the fifth consecutive quarter of negative sales tax growth.
Among other taxes, alcoholic beverage sales tax revenue was up 2.2 percent from the fourth quarter of 2008. Motor fuels sales tax revenue was down 4.8 percent when compared with fourth quarter 2008. Tobacco sales tax revenue, likewise, was down 3.1 percent.
Even as tobacco tax dollars shrink, cash-strapped states are boosting cigarette taxes to help plug budget shortfalls. In 2010 so far, legislators have voted to raise cigarette taxes by 75 cents a pack in New Mexico and $1 per pack in Utah. As many as seven other states are considering tax hikes, including South Carolina and Georgia, where tobacco farming is big business. In 2009, 14 states and the District of Columbia raised cigarette taxes, according to federal Centers for Disease Control and Prevention.
What the future holds
The 15 largest states by population forecast a sizable gain in tax revenue in fiscal 2011, according to state budget documents examined by Bloomberg.com and Business Week. The 50 states on average may increase collections by about 3.5 percent in the coming fiscal year. It will be the first occurrence in two years that the figure is expected to increase, according to Moody’s Economy.com.
