According to figures released by Maryland Comptroller Peter Franchot, fiscal year 2016 tax revenue failed to meet earlier estimates, coming in 1.5 percent lower than anticipated. For the period ending June 30 of this year, the state collected roughly $250 million less than the total expected.
Revenue decline attributed to multiple factors
While general fund revenue attributable to taxes stood at $16.2 billion for the 2016 fiscal year, the figure fell below what was anticipated, a sign of ongoing uncertainty within Maryland’s economic landscape. The year ended with a general fund balance totaling $384.5 million, out of which $188 million has already been designated for the 2017 fiscal year. The remaining unassigned amount came to $196.5 million.
According to Franchot, the reduction in tax collections is the result of a number of factors, not least among them being an ongoing insufficiency in the growth in wages as compared to the cost of living. This has, in turn, lead to a lower rate of consumer spending and a concomitant impact on tax revenue.
The Comptroller went on to suggest that the revenue trend is evidence of an economy that remains uncertain and vulnerable and that predictability in the eyes of small business owners and consumers is essential if improvement is to be achieved. Despite the fact that employment in Maryland saw gains of 1.8 percent during the relevant period, the lion’s share of those positions were in lower-wage sectors.
In addition, the reduction in revenue takings was blamed on volatility in the area of non-wage income including capital gains.
Other key data from Comptroller’s announcement
Though sales tax takings and income-tax withholdings saw increases of 2.2 percent for the former and 3.4 percent for the latter, these mildly encouraging developments were tempered by the 8.5 percent rise in refunds due to Maryland taxpayers. In fact, in fiscal year 2016, the state paid out $905 million in refunds above and beyond its fiscal year collections for 2016. Also discouraging was the fact that the modest increase in sales tax revenue came during the first full year of Amazon-related collections, suggesting that comparable growth in this realm was actually under 2.0 percent.
Experienced Maryland Tax Professionals
Achieving compliance and maintaining good standing with Maryland and federal tax authorities is not always a simple process. Businesses and individual taxpayers alike face a range of challenges when it comes to tax planning, filing and audit concerns. If you or your enterprise have critical questions or would like help in developing beneficial strategies for current or future tax years, the Maryland tax attorneys at Rosenberg Martin Greenberg are ready to bring expansive skills and resources to bear. To schedule an initial consultation to discuss your specific tax situation, we invite you to contact us at (410) 727-6600.