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article imageArizona: Valley auto sales help contribute to sales tax revenues

By Renee Walse     Nov 29, 2012 in Technology
Peoria - As U.S. economic analysts continue to look for small signs of growth in different industries around the nation, car dealers in Peoria can point to clear signs that the economy is headed forward.
A Growing Industry
According to a recent AZ Central story, the city of Peoria showed a better-than-expected 4.5 percent increase in sales-tax collections in from consumer purchases in 2012. This was the second year in a row for increased sales-tax collections, which reflects a larger statewide trend of more consumer purchases. The Arizona Department of Revenue noted that sales across the state rose 7 percent in June, the 20th consecutive month of gains.
According to the state figures, the biggest sales-tax increases came from auto sales, which increased nearly 17 percent from last year's numbers. This gain in the auto industry helped drive Peoria's retail sales tax almost 8 percent higher than last year. Likely helping add to the increased number is sales-tax revenue gained from auto accessories, maintenance and repair, parts and more from auto retail stores throughout the Valley.
Staffers at several Peoria car dealerships spoke about the increased auto sales. The general manager of Honda's Arrowhead dealership in Peoria told AZ Central that business has experienced "a pretty nice pop" since summer 2011. He mentioned sales increase expectations of about 10-12 percent for the year.
This pent-up demand and subsequent increase in sales mirrors a comparable increase in U.S. auto sales this summer. The New York Times reported that U.S. automakers experienced a nearly 20 percent sales increase in August — the best new-car sales month in four years.
The growth was attributed to increasing demand from car buyers for new models. To entice customers to purchase new models, dealerships have been offering 0 percent financing for those with good credit. Also helping to spur demand in the industry is the increased attention given to fuel-efficient models, which is not surprising considering continual increase in the price of gas.
The Snowball Effect
There are encouraging signs that the car industry will help propel tax-revenue bases in local towns and cities during 2013. Car Connection Magazine recently wrote that the U.S. auto market is charging full steam ahead. "J.D. Power predicts that the industry will see 12 percent growth this year, with 11.8 million vehicles sold at retail and another 2.7 million sold to fleet operators, for total sales of 14.5 million. Power bases those predictions on current sales data, which shows that U.S. consumers are likely to purchase 952,200 new vehicles this month. That's 12 percent higher than September of last year, and maintains the 12 percent pace of growth we've seen earlier this year."
With that type of auto sales growth, Arizona towns and cities can count on a good end-of-the-year bump in tax revenues from retail. And that will be good news for some struggling communities.
Some of the other towns and cities experiencing sales-tax revenue growth for fiscal 2011-2012 include Mesa, Tempe, which grew roughly 4 percent, and Scottsdale with 6 percent. The largest Arizona sales-tax revenue increase for fiscal 2011-2012 happened in Gilbert with nearly 11 percent and Chandler with nearly 13 percent.
The city of Gilbert reported a strong increase in consumer spending. AZ Central wrote in August: "A robust increase in consumer spending at Gilbert shops and restaurants helped boost the town's sales-tax revenue in fiscal 2012 to its highest level in four years. Gilbert pulled in nearly $54 million in local sales-tax revenue during the last fiscal year, which ended June 30, including a record high $28.4 million in retail taxes. Every major sales-tax category, including construction, hotels and restaurants, posted year-over-year increases."
Stale Personal Income Growth
University of Arizona's Economic and Business Research Center notes the spending release from consumers' pent-up demand throughout 2011 and into 2012 but sees slowing growth in 2012 second-quarter numbers. "Personal income statewide grew modestly (5.1 percent last year) but slowed to only a 3.8 percent gain during the first quarter. Meanwhile, a measure of retail sales that includes retail, restaurant and bars, gasoline and food rose by 9.3 percent in 2011 but slowed to an estimated 5.2 percent in the second quarter. So last year’s release of pent-up demand now appears to be in the rear-view mirror, and spending will need support from personal income going forward. We look for personal income to grow by 4.5 percent this year and next before the pace quickens. Aggregate sales are expected to register gains in the 5.0-5.5 percent range."
Relieved retailers around the Valley are happy about increased sales receipts during last year and are hopeful consumers will continue to buy goods and services. With increased incomes to combat rising prices, retail sales tax benefits can work for auto sales, clothing retailers and restaurants and bars across the Valley in 2013.
More about Automobiles, Taxes, peoria, Phoenix, Car dealership
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