Government revenues, apparently fueled by consumer spending, continue to grow at historic or near-historic rates.
State tax collections for the first five months of the current fiscal year are $ 215.1 million or 8.5 percent more than the amount collected in the same period last year, according to the recently released November income report by Legislative Budget Committee staff.
Revenue growth this year has been fueled primarily by sales tax, which is a 7% levy on most retail purchases. Sales tax revenue for the year is up $ 195 million or 23.7%. The sales tax levied on Internet purchases or other out-of-state purchases, known as the use tax, has increased by $ 11.6 million or 6.9%.
Sales tax collections indicate strong consumer spending. The sales tax increase also takes into account that inflation has gone up, meaning people are paying more for retail items, resulting in an increase in sales tax paid on purchases. .
Sales tax and use tax revenues represent approximately 45% of total state revenue.
Personal income tax collections (the state’s second-largest source of revenue accounting for about a third of total collections) are up more modestly by 1.2% or $ 11 million.
Total tax revenue through November stands at $ 2.76 billion.
Strong collections for the current fiscal year follow growth of 15.9% or $ 934.5 million for the previous fiscal year, which ended June 30.
Not only are the collections strong for the year but also for the month of November. The state raised $ 531.9 million in November 2021 compared to $ 477 million in November 2020.
While collections are strong overall, some revenue categories are down year over year:
– Corporate tax – down 9.9% or $ 19.8 million.
– Tax on insurance premiums – down less than $ 1 million or 0.77%.
– The tax on tobacco, alcohol and beer – down 4.4% or $ 5.3 million after an increase in alcohol purchases last year at the start of the pandemic.
On the other hand, casino tax revenues increased by $ 15 million or 28%.
Strong tax collections have resulted in a state surplus that is likely in the neighborhood of $ 2 billion as the Legislature meets in January to consider items such as a significant increase in teacher salaries and the possible elimination of income tax.
– Article credit to Bobby Harrison of Mississippi Today –