Growth in jobs and wages driving Mass. tax haul
With Massachusetts buoyed by an improving labor market, consumer confidence and spending, the Department of Revenue is projecting tax revenue growth of at least 3 percent in the fiscal year 2016 and around 4 percent the following fiscal year.
"Importantly, the revenues are driven by income and sales tax, how the consumer and job markets are doing," Revenue Commissioner Mark Nunnelly said. "I think the ultimate drivers ... are at some level fundamentally how well the job market in Massachusetts is doing, and I think we're seeing pretty good growth in both jobs and the beginnings of some increase in wages in Massachusetts."
Addressing lawmakers at an annual revenue hearing Wednesday, Nunnelly forecasted that revenues will end the fiscal year between $69 million and $231 million above the current fiscal 2016 estimates. The new estimate represents a growth of 3 percent to 3.7 percent from fiscal 2015, when revenue came in higher than initially projected.
The Department of Revenue predicts further growth of 3.8 percent to 4.2 percent in the 2017 fiscal year, Nunnelly said.
Income tax collections make up the largest portion of the state's tax revenues, at about 57 percent, Nunnelly said. Sales taxes account for about 23 percent, and corporate and business taxes approximately 10 percent. Other taxes make up the remainder.
The income tax rate will drop from 5.15 percent to 5.1 percent on Jan. 1, 2016, a reduction that will see the state collect $74 million less in the 2016 fiscal year and $152 million less in the 2017 fiscal year, Nunnelly said. A further rate decrease to 5.05 percent on Jan. 17 would reduce fiscal 2017 revenues by $79 million, which Nunnelly said is reflected in the department's forecast.
Income tax revenues are expected to increase, the commissioner said, with higher personal income, steady or rising employment rates and greater wage and salary disbursement expected in both the 2016 and 2017 fiscal years. Based on projections, the Department of Revenue expects an increase of 3.3 percent to 3.0 percent in total income tax revenue in 2016, and 4 percent to 4.6 percent growth in 2017.
Sales tax receipts are also projected to climb and have increased by 5.9 percent throughout the first five months of the 2016 fiscal year, Nunnelly said.
"I think the Massachusetts economy is doing pretty well," he said. "When there are more jobs and more wages, the sales tax begins to follow pretty quickly and pretty strongly."
Nunnelly said that worldwide economic conditions create "major sources of uncertainty" for revenue forecasts, citing unrest in the Middle East, economic slowdowns or recessions in Europe, China and some emerging markets, and a strong U.S. dollar.
WBJ Web Partners
Most Recent
Most Recent
0 Comments