The Commonwealth has collected more than $800 million in revenue from the sale of motor vehicles ($422 million) and the gasoline excise tax ($391.6 million) in the first eight months of FY12.
But the two sources of revenue have been trending in opposite directions: sales tax revenue from motor vehicles is up $33 million for the first eight months of FY12, while gasoline excise tax revenue is down almost $5 million in that same period.
Taxpayers are buying motor vehicles, but they are also pumping less gasoline into them.
A year ago, with cost of a gallon of gasoline approaching $4 a gallon — just as it seems to be doing today after a price fall-off that saw a gallon sell for $3.35 a gallon as recently as three months ago — conventional wisdom was that tax revenue from the gasoline excise tax would go down as the price went up.
However, the data disputed that notion; a year ago, gasoline excise tax collections were up, not down, and they finished FY11 at $581.7 million, $3.4 million more than in FY10.
In a post dated March 11, 2011, this blog noted that “Economists note that consumers react to price hikes not with quick action, but with measured, more long-term responses, especially if price spikes become permanent price hikes. Drivers may choose to purchase more fuel efficient vehicles, change to public transportation, or move closer to their workplace. There are other factors, such as household disposable income.”
A year later, in March 2012, it may well be that consumers have responded by cutting down slightly on gasoline consumption, but the fact remains they are still very much buying motor vehicles.
By the way, a year ago Massachusetts gasoline excise tax of 21-cents per gallon ranked 27th (with No.1 the highest); today, Massachusetts with the same excise tax, ranks 29th, according to the Tax Foundation.
DOR Ruling Favorable in First Circuit Judgment posted on Mar 17
The United States Court of Appeals for the First Circuit issued judgments in the Department of Revenue’s (DOR) favor last month, finding that taxpayers in Bankruptcy proceedings cannot discharge late filed tax returns. The court consolidated two similar cases brought before them involving a total …Continue Reading DOR Ruling Favorable in First Circuit Judgment
Five Reasons to E-File with DOR’s WebFile for Income posted on Feb 24
With Tax season well under way; DOR would like to help you make the decision to E-File with WebFile for Income this year. We know, “I’m not computer savvy” or “What about the safety of my information” has been said many times before, but we’d …Continue Reading Five Reasons to E-File with DOR’s WebFile for Income
Class in Session at DOR University posted on Jan 20
Looking to educate yourself this tax season? Want to learn more about tax options, or DOR-related issues? All this can be achieved at DOR University, the Department of Revenue’s free online e-learning module. DOR University, created to offer free tax education to the public and …Continue Reading Class in Session at DOR University