States ' sales tax growth slows in June: report

WASHINGTON (Reuters)-the central sales tax revenues grew slowly in June, with an average increase of only 2.1 per cent, according to a report released on Wednesday, suggesting a weakening trend that could threaten States ' recoveries.

Only 58 per cent of States met or exceeded their projected sales tax collections in June, compared with 82 percent in may, according to the economic newsletter The Liscio report, which surveys States about their tax levels.

2.1% average of annual growth in June was down from growth of 4.9 percent in may, the Liscio report showed.

"Even if you are an average of two months, it is without doubt the State sales tax receipts are in a declining trend, outside the States with heavy extraction of energy sectors, which is currently high single-digit growth rates," said the newsletter.

Revenue forecasts are crucial for the States ' fiscal planning because all States except Vermont must balance their budgets. During the worst recession of 2007-2009 revenue came in already depressed forecasts, forcing States to provide for emergency spending cuts in nearly all areas of public life.

Noting crawl back from collapse in revenue and budget crises gives income tax revenues the biggest blessing. Last week reported Liscio 77 per cent of the States hit mark on collections from income tax Withholding in June.

For the fiscal year that ended almost all States last month, tax collections beat expectations for at least 28 States, almost everything due to efficiency gains in revenue from taxes on investment and the company's income, according to the Center on Budget and policy priorities, a think tank tracking States taxation conditions.

CBPP said that in those States personal income tax revenues increased 9 percent during the year, more than double the growth as they had forecast. Meanwhile, sales tax is increased 4.4%, 1.5 percentage points above the forecasts.

Moms who made less than a quarter of the State and local government revenues during the first quarter of the year, according to the u.s. Census Bureau, rises to 73.7 billion dollars from 69.7 billion dollars in the first quarter of 2010.

But remain below levels in the first quarter of 2007, before the housing bubble burst and the country fell into recession, according to the Census Bureau.

Report Liscio said that factors such as time succour may collections and the "quite alarming decline between May and June may be long." There are other "noisy" elements to income data, say it.

-But in the noise, weakening trend is clear, it added.

(Reporting by Lisa Lambert, Editing by Leslie Adler)