Jelly Beans and Chocolate Bunnies

Retail sales tax receipts have received a boost this week related to Easter shopping, although it has not been dramatic.  Through Thursday, April 17, sales taxes net of refunds (such as for returned merchandise) have totaled about $64 million.  So far this fiscal year, sales taxes are the only one of California’s major three revenue generators (Including personal income and corporate taxes) not meeting expectations.

Hopefully, Californians will spend more before Sunday arrives.  Recent surveys by the National Retail Federation (NRF) suggest that American consumers will spend nearly $16 billion on purchases related to the Easter holiday this year.  Based on California’s 13% of the nation’s total income, California Easter sales should equal about $2 billion. 

 

NRF research indicates that Americans on average will spend $137 on Easter related purchases.  Food represents about one-third of this spending, with dollars going to both restaurants and grocery stores.  Apparel, gifts, and candy follow in terms of major Easter spending categories.  Consumers also will be doing more of their shopping online.   

 

With about 80% of Americans celebrating Easter in some way this year, the performance of sales this week will provide a significant barometer on consumer sentiment.  This will be important to California’s second most important revenue source.

Credits add up

State law allows for special credits to reduce personal income tax liability.  These credit provide tax preferences for a large range of activities, including providing child and dependent care, installing solar systems, and buying a new home.  In 2011, taxpayers claimed these credits at a combined value of $1.4 billion.