Jeffrey D. Allred, KSL, File

Utah's sales and fuel tax revenue dipped in March as pandemic closures began, data shows

By Carter Williams, | Posted - May 11, 2020 at 5:26 p.m.

SALT LAKE CITY — Utah overall sales tax revenue didn’t drop much in March as coronavirus-related statewide closures led to widespread closures across the state; however, new numbers released by the state’s tax commission Monday show exactly which industries were impacted amid the first few weeks of pandemic closures.

The Utah State Tax Commission reports an estimated 0.4% decrease in year-over-year sales tax revenue statewide in March. Motor vehicle tax revenue also dropped by 13%. The data was gathered by taxpayers on sales and fuel tax returns. Revenue from sales and fuel taxes goes into funding for items like Medicaid, social services, transportation and public safety.

Utah’s March sales tax report

While the commission’s preliminary March numbers show an overall impact on the state, they also give a clearer look into which counties, and also which specific industries were hit hardest by the pandemic-related closures.

Overall, counties had varying year-over-year sales tax revenue reports in March. Those with high tourism in the state experienced some of the worst drop-offs. Piute County experienced a 34% drop in sales tax revenue while Summit County fell 32%. Grand (-28%) and Garfield (-24%) and Rich (-21%) all experienced drops of more than 20%.

Other areas of the state were more fortunate, according to the numbers reported. Daggett and Juab counties each experienced more than 30% increases in that same category. Morgan (19%), Tooele (17%) and Iron (10%) rounded out the top five in percentage increases. In all, 17 of the 29 counties had sales tax revenue increases in March, according to the commission.

As for industries, revenue from nonstore retailers jumped 76% in March compared to the year-over-year average; agriculture, forestry, fishing and hunting rose 39%, food and beverage retail stores jumped 36%, and transportation and warehousing received a 34% increase year-over-year percentage.

But many industries suffered. Revenue from arts, entertainment and recreation plummeted 51% in March after reporting a 16% rise in February. The accommodation industry dropped 47% after experiencing a 21% rise in February, and the retail clothing industry fell 45% after a modest 4.8% increase in February. Tax revenue from food services and drinking places fell 26%.

As the state moved to online classrooms beginning in mid-March, revenue from educational services also fell 26%. Revenue from vehicle dealerships slipped 21% after that industry had a 13% rise the previous month.

Fuel tax drop

The numbers released Monday not only show there was a drop-off in people making vehicle-related purchases as the restrictions were put in place, but also indicate people were driving less as they were encouraged to stay at home. It also shows the impact that the pandemic had on flying in Utah.

Revenue from motor fuel dropped 13% and aviation fuel was worse, experiencing a 26% drop-off. Unleaded diesel, on the other hand, experienced a slight 3% rise in revenue.

Future declines?

The numbers released Monday weren't exactly unexpected. In fact, they seem to match unemployment reports released by the Governor's Office of Management and Budget and those released by the Utah Department of Workforce Service. Those reports show high-tourism counties and tourism-related industries were hardest hit in the first few weeks of the COVID-19 pandemic.

Since then, more than 100,000 Utahns have sought unemployment benefits in the state.

That also means there is a caveat with the commission's data. Many of the pandemic-related closures came in mid-March as COVID-19 cases began to be reported in Utah. That means there were about two weeks of sales recorded in March before statewide closures began.

The report on April numbers will be the first that shows tax revenue from an entire month of closures. Commission officials said that report is still being worked on and is expected to be released in mid-June. The commission also notes that the data could change before it is finalized because of late or amended returns.

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