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Todd A. Berry State Sales Tax Lagging WISTAX researchers cited several reasons for the lagging sales tax collections. First, rising internet sales are likely a major factor. A 2003 University of Tennessee study projected increased internet sales would result in state losses of between 8.5% and 13.2% of sales tax revenues by 2008. Second, oil prices nearing $100 per barrel have left consumers with less discretionary income. Finally, the weakened housing sector has impacted sales taxes. With building permits down significantly, there are fewer purchases of appliances, furniture, and other items a homebuilder or homeowner needs. Stagnant or declining home prices also make individuals feel less wealthy which can translate into less borrowing and less buying. The new report notes that a stagnant sales tax could have implications for the state budget. The sales tax yields more than $4 billion, or one-third of all state general fund taxes. Despite the fact that sales taxes have increased more than 3.6% only once in the last seven years, the 2007-09 budget counts on sales tax growth of 3.6% this year and 3.9% next year, or $472 million in new sales tax money over the biennium. If last year’s 0.8% increase were to repeat this year and next, the state would be short $372.1 million by mid-2009, WISTAX said. With a "paper balance" of less than $5 million, a deficit of nearly $370 million would loom. For a free copy of Focus, "The incredible shrinking sales tax," contact WISTAX by e-mail at wistax@wistax.org; by phone at 608-241-9789; or by mail at 401 North Lawn Avenue, Madison, WI 53704. WISTAX celebrates 75 years of public policy research and citizen education. o (Editors Note: An electronic version of this column is available at www.wistax.org.) The
Wisconsin Taxpayers Alliance, founded in 1932, is the state’s oldest and
most respected private
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