Arkansas tax revenue up sharply in April, but ... | Arkansas Blog

Thursday, May 2, 2013

Arkansas tax revenue up sharply in April, but ...

Posted By on Thu, May 2, 2013 at 10:00 AM

The monthly report on Arkansas tax collections in April was in keeping with the announcement yesterday that the annual forecast was being revised upward because of improving economic conditions.

But the whopping increase in net revenue is a little misleading. They were up by 15 percent over the same month a year ago and up 14.2 percent over the forecast. But, said the Department of Finance and Administration:

Results were mainly driven by high growth in individual income tax. 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.

The categories affected by this pattern in April were returns and extensions with payments. The gain included multiple types of activity, including tax shift strategy, expedited returns processing compared to year ago, and one-time business transactions. Expedited returns processing potentially pulled activity from May collections into April. In other income tax categories, collections growth in withholding was modest and estimated payments were down.

And here's more downside, a bellwether of econmomic activity, the sales and use tax:

Sales and Use tax collections were below forecast by $12.0 million or -6.5 percent and also below year ago levels. 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.

I do wonder how much the migration to on-line sales, much of it with retailers who don't currently collect Arkansas sales taxes, affects this segment of the revenue picture, as opposed to economic conditions.

Here's the full report.

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