Rethinking Reliance On Sales Tax
As government offices continue to recover from the last recession, tax reform is often brought to the table for discussion. Cutting income taxes or raising sales taxes may not yield the revenue that public offices had hoped. While it can be hard to imagine making more budget cuts, controlling expenditures is just as important as raising revenues.
According to “Why States’ Increasing Reliance on Sales Taxes Is Risky,” posted by Liz Farmer on Governing.com, states may notice revenues returning after the most recent recession; however, what they do now could put them at risk during an economic downturn. Several states cut income taxes and raised sales taxes to get through the recession and others increased sales taxes after the cuts to income taxes resulted in little revenue. Although reliance on sales tax may be easier to forecast and less volatile, it impacts lower-income earners more than the wealthy. In addition, sales tax revenues are growing slower than personal income. Though making small tax increases could be helpful, it’s not easy to convince constituents that it’s necessary. When revenues can’t be balanced against spending, even with deep spending cuts, states could find themselves in a precarious position should another recession take place.
Control over finances becomes even more important in these delicate post-recession times. State and local government offices can gain control and insight over finances by deploying stronger management technology. An enterprise resource planning (ERP) solution can manage common accounting operations including tracking revenues from taxes, grants, or other sources. You can also create budgets for your overall financial activities, specific grant-funded projects, or other programs that you can follow in real-time. Time-saving automations can also streamline billing, project management, and grant management processes which can improve productivity throughout your office. Built-in business intelligence and robust reporting can be used to identify trends and look for new ways to save money, cut wasteful practices, and improve services.
With the support of modern technology, governmental offices can gain control over finances and be better prepared during these challenging economic conditions. Contact AKA Enterprise Solutions for additional information about using ERP to get finances in order and position your public office for success.