A newly released study conducted by the Fiscal Research Center at Georgia State University examines changes in sales tax collections in the Peach State over the past fifteen years, and concludes that because of a number of temporary and long term influences, sales tax revenue has declined significantly from what would be expected based on the growth of state gross domestic product and personal income. According to the study, sales tax collections in constant dollars peaked back in 2001. Since then, the state’s GDP has grown by 14% and personal income has increased by 24%. Yet, sales tax revenue is down by 31%.

In current dollars, an increase in revenues at the same rate as state GDP since 2001 would have led to state sales tax revenues in fiscal 2014 being about $2.2 billion higher than was actually collected. Using the growth of personal income instead, 2014 state sales tax revenues would have increased by about $2.8 billion. Given that total state revenue in FY 2014 was just short of $20 billion, the causes of the shortfall and whether it represents a short term abnormality or a long-term trend could have an effect on possible efforts to modify the state’s tax code.

Read more