1. Boone County Retail Sales August 27, 2007 Judith I. Stallmann Professor: Agricultural Economics Rural Sociology Community Development Extension Truman School of Public Affairs

2. Economic changes affecting sales tax revenues Business cycles Inflation—gasoline and food prices Retail prices for many items have fallen resulting in lower tax collections per unit People spending a larger percentage of their income on services, most of which are not subject to sales tax Regional trade center Internet and catalog sales increasing ©Judith I. Stallmann

3. http://ded.mo.gov/researchandplanning/indicators/taxable_sales/taxable_sales1q07.stm

4. ©Judith I. Stallmann Boone County

5. Inflation Gasoline Food prices increasing –Costs of energy –Frosts killed orange crop –Corn prices up due to ethanol production Affect costs of animal products More land planted to corn and less to other crops, so their prices also rise Consumer Price Index ©Judith I. Stallmann

9. Boone taxable sales Retail sales Other sectors Change overtime in composition of taxable sales

10. ©Judith I. Stallmann Boone County

11. ©Judith I. Stallmann Boone County

12. ©Judith I. Stallmann Boone County

13. ©Judith I. Stallmann Boone County

14. ©Judith I. Stallmann Boone County

15. ©Judith I. Stallmann Boone County

16. People spending a larger percentage of their income on services, most of which are not subject to sales tax Income levels and spending Boone per capita income In 1998 was $25,000 In 2005 was $35,000

17. ©Judith I. Stallmann Data discontinuity because of change in classifications

18. ©Judith I. Stallmann Boone County

19. ©Judith I. Stallmann Based on BLS data for the Midwest

20. ©Judith I. Stallmann Boone County

21. Regional Trade Center

22. Actual and potential retail sales Formula to estimate potential retail sales common in regional trade analysis Compare actual retail sales with potential to determine if the county is attracting more or losing some retail sales Will estimate –Potential county-level traditional retail trade –Potential e-commerce at county level ©Judith I. Stallmann

23. Estimation 1)State per capita sales 2)County per capita income as a proportion of state per capita income 3)State per capita sales * county income proportion = potential sales per capita 4)Potential sales per capita * county population = total potential sales 5)Actual sales – potential sales = gain or loss of sales ©Judith I. Stallmann

24. Estimate of County taxable sales gains: 2005 Boone CountyRetail salesTotal taxable sales Potential sales$1,170,333,565$1,817,123,859 Actual sales1,372,711,4912,085,143,986 Sales gain202,377,926268,020,127 ½ cent tax1,011,889.61,340,100.6 1/8 cent tax252,972.4335,025.1 ©Judith I. Stallmann Note: Correction to sales tax revenue estimates 8-27-07

25. E-commerce Internet and catalog sales increasing Potential retail sales loss to e-retail

26. Estimated Quarterly U.S. Retail E-commerce Sales as a Percentage of Total Quarterly Retail Sales: 4th Quarter 1999–4th Quarter 2006 Percentage of Total http://www.census.gov/mrts/www/data/html/06Q4.html

27. Components of E-commerce Business to Consumer: $93 billion Some of this is already taxed –Traditional catalog houses on internet –Traditional retailers on internet (national and local) –Automobiles are very important “Pure” e-commerce Business to Business: $1.3 trillion Some of this is also taxable http://www.census.gov/eos/www/2005/2005tables.html

28. National sales: 2005 (Millions of $s)TotalE-commerce Manufacturing$4,735,3871,265,987 Wholesale (excludes inter-firm transfers) 3,585,038474,801 Retail trade3,693,43093,280 Selected Services5,983,68995,691 http://www.census.gov/eos/www/2005/2005tables.html

29. National retail sales: 2005 Selected Sectors (Millions of $s) Total salesE-commerce sales Total retail trade 3,693,430 $93,280 441 Autos & parts 888,307 16,729 454 Non-store retailers 244,333 68,054 454110 Electronic and mail order 161,598 65,387 http://www.census.gov/eos/www/2005/2005tables.html

30. Estimate of e-retail purchases by county residents US per capita e-retail sales$314.59 County per capita income US per capita income.91 County potential e-retail per capita $287.65 County potential e-retail$41,232,832 Taxes are paid on some e-retail ©Judith I. Stallmann

31. County e-commerce estimate Affected by income, which is in the formula Also affected by connectivity –Boone County is likely more connected than the US average Likely also affected by age –Boone County has a large young population ©Judith I. Stallmann

32. Predicting taxable sales In general the previous year is a reasonable starting point—but does not provide an accurate estimate Predicting turning points is difficult –Will it grow faster than the previous year or slower? –Factors affecting retail sales (examples) Income Inflation Retail availability and competition ©Judith I. Stallmann