With the release of the General Revenue Report for October, we now have enough information to calculate preliminary figures for Arkansas Taxable Sales (ATS) for the third quarter of 2012. The sales tax collection figures dropped fairly sharply in June, and have shown little little sign of growth since then. As a result, Arkansas Taxable Sales are down 3.4% in the third quarter, following a slight quarterly decline (-0.5%) in the second quarter of the year (seasonally adjusted). Compared to the same period last year, third-quarter ATS was down 1.0%.
According to data from the Oil Price Information Service, monthly average gasoline prices in Arkansas have varied in a range of $3.22 to $3.74 per gallon so far in 2012. On a quarterly average basis, however, gasoline prices have shown little movement this year. Data on gasoline sales from the state’s Motor Fuels Tax section indicate a small increase in the third quarter (+3.3%) following a sharp decline in the second quarter. As a result, Arkansas Taxable Sales Including Gasoline (ATSIG) was down 2.5% for the quarter, and down 0.9% from the third quarter of 2012.
Sources: Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement
Sources: Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement
The weakness of sales and use tax collections over the past three to four months has been unexpected, and at least somewhat puzzling. Other sources of state revenue–notably the individual and corporate income taxes–have been showing robust year-over-year gains. The second annual sales tax holiday for back-to-school shopping may be partially responsible, but the magnitude of that effect is unlikely to account for the overall weakness in sales tax collections in the third quarter. Growth in online shopping might also be expected to suppress sales tax collections, but that trend represents a long, gradual process and does not seem to be a likely candidate to explain third quarter growth specifically. The recent weakness in sales tax collections does coincide with a slowdown in employment growth and unexpected weakness in home sales, but the information is too preliminary to conclude that we’re experiencing a broad-based economic slowdown in the second half of 2012.
At this point, the third quarter data are incomplete. Final figures on sales and use tax collections are not yet available, nor are the data for gasoline sales in September (the gasoline component of ATSIG in this preliminary report is includes September figures that are derived from model-based estimates). The data will be updated here on the pages of the Arkansas Economist when final information becomes available.
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Arkansas Taxable Sales (ATS) is calculated by the Institute for Economic Advancement to serve as a timely proxy for Arkansas retail sales. The series is derived from sales and use tax data, adjusting for the relative timing of tax collections and underlying sales, changes in tax laws, and seasonal patterns in the data. Arkansas Taxable Sales Including Gasoline (ATSIG) incorporates data on the state motor fuel tax and gasoline prices from the Oil Price Information Service.
A spreadsheet of the data is available here: Arkansas Taxable Sales Data 2012:Q3 (Excel file)
* Data are preliminary until the release of the DFA report, Arkansas Fiscal Notes for October 2012, and will be updated when information becomes available.
