Gas Price Swings Prompt Changes to Sales Tax Projections

Dec 16, 2016

Sales Tax Misses

Indiana’s sales tax collections have failed to meet expected levels for 21 of the last 23 months. That’s prompting state fiscal analysts to change the way they project those revenues.

In the last two fiscal years, Indiana’s sales taxes missed the mark by roughly a combined $154 million. Office of Management and Budget Director Micah Vincent says while there are a few reasons for that, there’s one central cause.

“This past fiscal year, we missed forecast by I think it was about $123 million,” Vincent says. “You could contribute that almost entirely to the amount of the miss on sales tax on gasoline.”

State fiscal analysts are now changing the way they calculate sales tax projections to better account for swings in gas prices that greatly affect those collections.

But House Ways and Means Vice Chair Rep. Bob Cherry, R-Greenfield, notes there is another cause, as he urges people to get their Christmas shopping done.

“And don’t do it online, because I think people buying online…we’re still being short of sales tax,” Cherry says.

Sales taxes through almost half of the current fiscal year are nearly $89 million off the mark.