Figures released this morning by the Arkansas Department of Finance & Administration show sales tax receipts were up 3.8% in November from a year earlier. Generally, remissions of sales taxes correspond to sales that took place in the previous month, so the newest information indicate that Arkansas Taxable Sales (ATS) recovered substantially in October. Sales tax receipts over the past four months have been considerably weaker than expected, falling notably below their trend growth rate. The latest increase doesn’t replace the revenue shortfall that accumulated in prior months, but it does bring ATS closer to the average growth path that has emerged since the end of the recession.
Average gasoline prices in Arkansas were down slightly in October (falling to $3.50 from $3.65 in September), but a forecast increase in sales volume is expected to boost total spending on gasoline for the month. As a result, preliminary figures for Arkansas Taxable Sales Including Gasoline (ATSIG) suggest an increase of 4.1% in October compared to the previous year.
Third Quarter Revisions
Complete data are now available for ATS and ATSIG for the third quarter of the year. The final figures for September were slightly higher than the estimates used to project preliminary data. As a result, third quarter taxable sales were down 2.5%–an improvement from the 3.4% contraction in the preliminary report. Compared to the previous year, third quarter ATS and ATSIG were both down 0.5%.
There is no obvious explanation for the weak taxable sales in recent months. But the rebound in October is an encouraging sign as we move into the critical holiday sales season. Overall, taxable sales in the fourth quarter are expected to be about 3 to 3-1/2% above their 2011 pace.
# # #
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)