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Cannon’s Canon: FY2019 Numbers Are In – Sales Tax Grows Faster Than Inflation and Population Growth

The final “Utah State Tax Commission Monthly Revenue Summary” (also known as the TC-23 Report) for fiscal year 2019 was published in July, essentially closing the books on this fiscal year as far as revenue the State of Utah collects. For those that aren’t familiar with it, the report  details the amounts the State is collecting in the General Fund (sales and use tax), the Education Fund (income tax) and the Transportation Fund (motor fuel tax) and gives a monthly look into how they are trending. With the fiscal year for the State of Utah ending in June, we now have the complete year in the books and can take a look at how things ended. 

In fiscal year 2019, Utah collected $8.1 billion in revenue to the General Fund, Education Fund and Transportation Fund combined, representing year over year growth of 6.9%. That was 23% higher than the consensus growth target of 5.6%.

In the eyes of your Utah Taxpayers Association, the recent TC – 23 report makes two things very clear when it comes to sales tax and income tax.

First, in regards to sales tax revenue, it grew faster than inflation and population growth for the 9th year in a row. In addition, it is notable that sales tax grew solidly even in a very low sales inflationary environment. Inflation was 1.6% and population grew by 1.8% for a combined amount of 3.4%, yet sales tax collections grew by 4.3%, approximately 26% more than those combined. As the debate continues on tax reform, this is an important data point that should be part of the conversation.

The second item this TC-23 report makes clear is that the case for an income tax cut is stronger than ever. Education Fund collections reached $4.9 billion in fiscal year 2019, representing a year over year increase of 9.1%. That is an astounding 50% higher than the consensus target growth rate of 6.0%! This puts the education fund at $140 million above the target. When combining the $140 million with the $75 million that the Legislature set aside during the 2019 session for a tax cut, there is room for a $200 to $250 million dollar income tax cut with ease. We could lower the rate to 4.7% or even lower. States that are nipping at Utah’s heels are taking their income tax rates down to 3% or lower in some cases. Utah needs to cut the income tax rate to stay competitive and maintain the fertile economic environment we have created.

So, as the tax reform discussions roll on, the recent TC-23 report shines sunlight onto the actual numbers that we now have and can steer Utah in the right direction on tax policy. Your Utah Taxpayers Association will be working to make sure that happens.

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