Personal Taxes

Private earnings lags behind in October’s tax income report

by Timothy McQuiston, Vermont Business Magazine

Interim Administrative Secretary Kristin Clouser today released Vermont’s October 2021 sales results. The cumulative income of the General, Education and Transport Fund was slightly below the target for October 2021, the first month of the second quarter. Sales for the current year are still above the targets.

Notably, income tax, which has been well above target for months, fell nearly $ 4 million (-4.5%) in October. The PI is the primary source of income for the State General Fund. However, it is still nearly $ 12 million above targets for the fiscal year (+ 3.81%).

Consumer-related tax revenues were mixed.

The tourism-related room and board tax rose while sales and gasoline fell. Motor vehicle sales rose (+ 4.95%), which, like the PI, is generally regarded as a barometer for economic health.

Overall, the state’s General Fund, Transportation Fund, and Education Fund combined revenues for September were $ 222.6 million, or 1.8%, below monthly consensus expectations.

Cumulative revenue remains 3% above consensus expectations for revenue for the first four (4) months of the state’s fiscal year.

General Fund revenues for the month were $ 136.4 million, or $ 4.2 million below the monthly consensus revenue target.

However, for the year to date, General Fund revenues were $ 578.5 million, exceeding its target by $ 24.4 million, or 4.4%. Income tax and corporation tax took a brief respite in October from the brisk pace of the first quarter of the fiscal year.

Clouser said on the revenue statement that while we are still on track to meet or exceed annual targets, we will be careful that this is not a new trend.

The Transportation Fund was slightly below consensus expectations for the month, raising $ 25.2 million.

In the fiscal year to date, the T-Fund raised $ 100.2 million, which is $ 450,000, or -0.4%, below its consensus cash flow target.

T-Fund revenue continues to be driven by vehicle-related revenue, but gas tax revenue and miscellaneous revenue in the Other Fees category were below consensus for both the month and year to date. Despite the negative tone in some T-fund categories, the cumulative income remains in the consensus area.

The Education Fund was $ 530,000, or 0.9%, above the monthly consensus target after raising $ 61.1 million for the month.

In the first four months of fiscal year, the Education Fund received $ 229.2 million, which is $ 2.3 million, or 1.0%, above the consensus target.

Sales and use taxes were below expectations for the month and fiscal year, however, meal and room taxes have more than filled the void as tourists return to Vermont and the hospitality industry continues to recover.

According to Interim Secretary Clouser, “Overall, October sales results reflect the uneven pace of Vermont’s recovery, but at this point we remain confident that sales are on track to meet consensus sales estimates for the current fiscal year. “

Governor Scott was welcomed by VBM at his press conference on 2. The Pandemic Emergency Unemployment Benefit (PEUC) Program expired on September 6th.

This October sales report is the first full month without the supplement since the first version of it was released in March 2020.

The governor conceded that a change in positive tax revenues could change, as could the tight labor market, but it would take time to understand the full implications for both without PEUC.

“I think wages have gone up,” said Scott. “They were in some ways supported by additional income from the federal government last year. This may not continue over time if we are unable to put people in these roles and meet the needs of the workforce. So we’ll see. But I think we’ve seen an increase in revenue. At this point it is supply and demand. “

In the latest unemployment report, Labor Commissioner Michael Harrington said Vermont had lost 25,000 workers and nearly as many vacancies in the state. The PEUC Supplement has been blamed by some for discouraging potential workers from looking for work. So far, those who are not flocked have not come back to work.

National reports that found around 25 million Americans never returned to work suggest that many workers are looking for new career opportunities rather than returning to their old jobs.

Nonetheless, the national labor market scene appears to be improving as new jobless claims have decreased. This has not yet been the case in Vermont, where jobless claims have increased slightly, but at a relatively low level. This suggests that many Vermonters are still not ready to return to work.

The VBM reports from across the country confirm a persistently tight labor market for almost all industries. This was the case before the pandemic and was exacerbated by it. Childcare has emerged as a driving force in keeping adults at home, either because of COVID logs in school or because childcare in general is simply not available due to work pressures or health concerns.

Kristin Clouser has taken over the administrative office for Susanne Young, who retired at the beginning of the month.

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