Treasury: Revenue Growth Brakes in January

TRENTON — The Department of the Treasury reported that January revenue collections for the major taxes totaled $4.1 billion, up $10.3 million, or 0.3 percent, above last January. Fiscal year-to-date, total collections of $18.75 billion are up $793.3 million, or 4.4 percent above the same seven months last year.

January collections for the Gross Income Tax (GIT), which is dedicated to the Property Tax Relief Fund, totaled $2.188 billion, down $165.4 million, or 7.0 percent, below last January. Year-to-date, GIT collections of $8.0 billion are down $344.0 million, or 4.1 percent. January’s GIT collections were held down by the fact that there was one less employer withholding payment compared to the year before, which is a timing issue due to the way the calendar falls, whereas December had an extra such payment.

The Sales and Use Tax, the largest General Fund revenue source, reported collections of $1.161 billion in January, an increase of $55.5 million, or 5.0 percent.  Due to the one-month lag in the reporting of Sales Tax collections, January revenues reflect December consumer activity, which is the largest Sales Tax collections month annually due to the impact of holiday-related consumer behavior. Year-to-date, Sales and Use Tax collections of $5.616 billion are up $224.0 million, or 4.2 percent.

The Corporation Business Tax (CBT), which is the second largest General Fund revenue source, reported $179.6 million in January, down $41.5 million, or 18.8 percent below the same month last year. Year-to-date through January, CBT collections of $1.972 billion are down $43.8 million, or 2.2 percent below the same period last year.

Treasury notes that total revenue collections continue to be substantially higher than last year primarily because of the new Pass-Through Business Alternative Income Tax (PT-BAIT). January saw $169.2 million in PT-BAIT collections and year-to-date collections now total $1.169 billion. The new tax allows pass-through entities to elect to pay tax on proceeds that are distributed to its owners. In return, owners will be able to claim a tax credit against their CBT or GIT liability that is equal to their share of the pass-through entity’s tax liability.

Credits offsetting most of these payments are expected to be issued before the end of FY 2021.  In future years, the PT-BAIT collections will largely represent a shift in the timing of revenue collections that normally would come in during the spring, rather than a new State revenue stream. Were it not for this timing shift, both January and year-to-date total collections would fall below last year’s levels.

Please see the attached chart for monthly and yearly comparisons.