By BOBBY HARRISON / Mississippi Today
Still, state Economist Darrin Webb and Mississippi’s other financial experts are projecting use tax revenue going to the general fund for core state functions such as education, law enforcement and health care will slow or even be less this fiscal year. Through November, or through the first five months of the current fiscal year, use tax collections going to the state general fund are down $3.5 million to $117.7 million, according to information compiled by the staff of the Legislative Budget Committee.
Use tax collections for core functions of state government are down because they are being diverted to local governments, according to the financial experts who give the Legislature projections of how much revenue the state will collect.
Webb is citing legislation passed during the 2018 session to divert use tax revenue from paying for those core state functions to paying for local needs. During the special session, legislators, hoping to avoid raising the tax on motor fuel to pay for infrastructure needs, voted to phase in the diversion of 35 percent of the use tax revenue from those core state funds to local needs. When fully enacted, the diversion will send about $120 million annually (an amount that will grow over time) from state needs to the local governments.
The use tax is a 7 percent tax levied on items purchased out of state, such as on internet or catalog sales. The primary reason the use tax is growing is that in June 2018 the U.S. Supreme Court ruled that states could levy a sales tax (or use tax) on internet purchases.
The Supreme Court decision was a key because in recent years sales from traditional brick and mortar stores have slowed or even decreased. In recent years, sales tax revenue has slowed while use tax revenue in general has exploded, though, the sales tax collected from retail stores remains Mississippi’s single largest source of revenue.
A late October report by Wells Fargo Securities Economic Group projected, “For the first holiday season ever, non-store retailers will likely surpass grocery and general merchandise stores, accounting for the largest share of holiday spending .”
For the past fiscal year, ending June 30, use tax collections for the state were up 24 percent to $419.6 million while sales tax collections were up 2.6 percent to $3.2 billion. Sales tax collections also are growing at a 2.6 percent rate through November – the first five months of the current fiscal year.
Thus far this fiscal year, use tax collections are up 8.9 percent to $173 million. But a larger portion is being diverted to pay for local services instead of state services.
The post Tax from internet sales growing, but state getting less appeared first on Mississippi Today.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info