Docstoc

Federal Sporting Goods Tax - PDF

Document Sample
Federal Sporting Goods Tax - PDF Powered By Docstoc
					Analysis of the Sales Tax Attributable to Sporting Goods




                             A technical report
    completed as part of "Texas Outdoors: A Vision for the Future" study
        commissioned by the Texas Parks and Wildlife Department




                           John L. Crompton
                         Texas A&M University
           Department of Recreation, Park and Tourism Sciences




                               August, 1998
                                                      Table of Contents


Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Evidence of the Nexus Between Park Visitation and Sales of Sporting Goods . . . . . . . . . . . . . . 1

Analysis of the Comptroller's Estimates of Sales Tax Revenues Attributable
    to Sporting Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Implications of the Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21




                                                                   i
                                        Executive Summary

1.   There is a clear relationship between the             from this tax source being allocated to
     purchase of sports equipment and state                expand or enhance provision of indoor
     parks visitation. Sports equipment                    facilities.
     buyers visit state parks substantially
     more than those who do not purchase              4.   There is a need for the amount
     sports equipment.                                     appropriated from this source to
                                                           increase annually to reflect increased
2.   However, approximately one half of                    usage and services, and costs
     those who purchase equipment do not                   attributable to these increased demands
     visit state parks. Even though many of                and to inflation. The total tax revenues
     these individuals do use their equipment              accruing from sporting goods as defined
     at local park and recreation agency                   by the legislation is estimated to be
     facilities, there is some proportion that             $84.6 million. However, there is no way
     does not use it at any public facilities.             to calculate this amount accurately. The
     Indeed, some items categorized as                     existing approaches offer varying totals
     sports equipment by the Comptroller                   and are complicated and unwieldy to
     may not be used for sport or recreation               calculate. Thus, it is recommended that
     purposes (e.g. binoculars, sunglasses,                funds from sales tax is derived from
     backpacks, handguns). Thus, it would                  sporting goods be appropriated annually
     be inconsistent with the benefit principle            at a fixed percentage of total State sales
     for all sporting good tax revenues to be              tax receipts.
     allocated to expand or enhance the
     public park and recreation estate.               5.   To retain the level of funding originally
                                                           provided from the Sporting Goods Tax,
3.   Some sports equipment is used                         the appropriation would be fixed at .003
     exclusively in indoor contexts, so there              of the State's sales tax receipts.
     is justification for some money




                                                  i
                   Analysis of the Sales Tax Attributable to Sporting Goods

     From 1980 to 1993 Texas Parks and               Evidence of the Nexus Between Park
Wildlife Department (TPWD) received                  Visitation and Sales of Sporting Goods
designated funding for parks from a 2 cent
tax on a packet of 20 cigarettes. Half of this            The legislation designated the sporting
was used to finance the Texas Recreation             goods taxes to TPWD because the notion of
and Park Accounts, while the other 1 cent            a nexus between park visitation and sporting
was allocated to TPWD for the operation of           goods sales intuitively appeared to be sound.
state parks. With effect from FY 1994, the           The approach says, "Let's take tax money
state legislature amended the legislation so         paid for products purchased by park,
cigarette taxes were allocated to the general        recreation, and natural amenity users, and
fund, and a designated fund was created              allocate that money to develop more park,
from sales taxes on sporting goods that              recreation, and natural amenity resources."
previously had gone to the general fund. A           The fishing and hunting resources of Texas
$32 million cap was established on the               have long benefitted from the funds TPWD
amount authorized for the designated funds,          has received from the federal Wallop-Breaux
since this was the approximate amount that           and Pittman-Robertson Funds derived from
had previously accrued from the cigarette            excise taxes on fishing and hunting
tax.                                                 equipment, respectively. The sporting goods
                                                     tax in Texas extends this principle to a
     The change was authorized for two               broader set of park and recreation users.
reasons. First, there was a strong nexus             The premise is that sporting goods taxes are
between sporting goods sales and recreation          collected from the purchasers of those goods
provision, whereas such a nexus was not              by sporting goods retailers, and are invested
obvious with the cigarette tax funds. Indeed,        by TPWD and its local agency partners in
it was incongruous that those supporting             facilities and services from which these two
parks should have to be advocates of                 groups of stakeholders derive benefits.
stronger cigarette sales in order to garner
funding for parks. Second, cigarette sales,                Before making further commitments
and consequently revenues to TPWD, were              about the investment of these funds,
falling, while the demands for more park             legislators are likely to want to know how
services were increasing. In contrast, it            much increase in the sales of sporting goods
seemed likely that sporting goods sales              is likely to emerge from the investment of an
would rise in accordance with increased              additional $x in recreation and sport services
interest in recreation and sport, and with           by TPWD and its local partners. The
growth in the State's population. Thus,              research team could not identify a feasible
although revenues to TPWD from the                   strategy for acquiring data that would enable
sporting goods tax were capped at $32                this relationship to be directly modelled.
million, there are opportunities in the future       However, questions pertaining to the
for the legislature to consider raising or           relationship were included in the April 1998
removing that cap to accommodate increased           statewide survey of Texas households
future demands for parks.


                                                 1
(n = 3000) and in surveys of park visitors             equipment is relatively tenuous when it is
undertaken in September 1996 (n = 1429)                compared to the strength of the relationship
and September 1997 (n = 866).                          in the other six categories. Given that most
                                                       exercise equipment is likely to be used
     The seven largest categories of sporting          indoors, the relatively tenuous relationship to
goods that the Comptroller recognizes as               park visitation was not surprising.
qualifying for the TPWD designated fund are
listed in Table 1. In the April 1998 statewide              When the relationship of sports
telephone survey, all respondents were asked           equipment purchases to participation in
three questions pertaining to each of these            outdoor recreation close to home was tested,
seven categories of sporting goods: (1) Do             the pattern was again confirmed. Tables 4A,
you own [Fishing Tackle and Boat                       4B, and 4C show there is a substantial
Accessories?]; (2) Did you purchase any in             difference in every case between those who
the last 12 months?; and (3) Do you plan to            did not participate close to
purchase any in the next 12 months?                    home and those who did. The data indicate
Responses to these questions are reported in           that as participation levels increase, a greater
Table 1.                                               percentage of individuals purchased sports
                                                       equipment.
     If there is a link between park use and
sporting goods sales, then it would be                      The relationship pattern between
expected that sales of products in the seven           purchase behavior and state park day use
categories shown in Table 1 would be much              was generally replicated when similar cross-
lower to nonpark goers than those to park              tabulations were done with those who stayed
visitors, and that sales to heavy park users           overnight (Tables 3A, 3B, and 3C). The
would be higer than those to relatively                relationship between extensity of overnight
infrequent visitors. In Tables 2A, 2B, and             visitation and exercise equipment was not
2C respondents were classified into three              supported in Tables 3B and 3C, but the only
categories of day visitors to state parks (not         other aberration was in the category of
overnight visitors). Infrequent users were             Bicycles and Bicycling Accessories. There
operationalized as people who reported they            was no difference between the proportion of
visited Texas State Parks for 1-5 days per             infrequent and heavy purchasers who
year, while heavy users were those who                 planned to buy bicycles and bicycling
made 6 or more day visits.                             accessories in the next 12 months (Table
                                                       3C), and the differences between these two
     The data in Tables 2A, 2B, and 2C                 groups in Tables 3A and 3B were small.
confirm the postulated relationship in almost
every instance. The only exception was in                   In surveys undertaken in September
the Exercise Equipment category in Table               1996 and September 1997, state park visitors
2B where a greater proportion of infrequent            were asked to indicate which of the 13
park users reported purchasing equipment in            products listed in Tables 5A, 5B, 6A, and 6B
the past 12 months than heavy park users.              they owned. These products were selected
Indeed, in all three tables, the relationship of       because they appeared likely to relate to park
park visitation to the purchase of exercise            visitation. Visitors were classified into three


                                                   2
categories based on frequency of their               that in 12 of the 13 cases a higher proportion
attendance at state parks.                           of those who visited on 6 or more days
                                                     owned the equipment than those reporting
     The sample who comprised the                    no day visits in the past 12 months. The
September 1996 study were selected from a            exceptions were fishing equipment and ice
larger group of individuals who were                 chests in each study, respectively. The same
interviewed in Texas State Parks two years           pattern emerged among overnight visitors in
earlier. Thus, all of this sample had some           September 1996 survey, where the single
history of state park visitation, even those         exception was spotting scopes (Table 5B).
reporting no visits in the previous 12 months,       Among overnight visitors to the September
such as the 202 respondents in Table 5A.             1997 survey, the exceptions were spotting
Similarly, respondents to the September              scopes, backpacks, and sleeping bags.
1997 survey had to have been park visitors at
some time in the previous three years or they             All three surveys indicated that there
would not have been part of the sample.              was a clear relationship between equipment
                                                     purchases and state park visitation. A
     Differences between the three categories        substantially smaller proportion of those who
of visitors shown in Tables 5A, 5B, 6A, and          did not visit state parks purchased outdoor
6B were not as emphatic as those in the              recreation and sports equipment, compared
statewide survey because all these                   to those who did visit state parks. Further,
respondents were park visitors, and nonpark          the proportion of purchasers was much
goers were excluded. Nevertheless, both              higher among frequent park goers than it
Tables 5A and 6A, which addressed day                was among infrequent visitors.
visits over the two time periods, show




                                                 3
                                     Table 1
                          Purchases of Sports Equipment
                                (TAMU 1998 Survey)


                              Own           Purchased in Past 12   Plan to Buy in the Next 12
          Item
                            (n=2,990)             Months               Months (n=2,950)
                                                 (n=2,970)
Fishing Tackle and Boat
                              56%                    28%                     37%
      Accessories
 Hunting and Firearms
                               40                    13                       15
      Equipment
  Exercise Equipment           58                    21                       21
 Camping or Picnicking
                               56                    22                       30
     Equipment
 Bicycles and Bicycling
                               55                    18                       22
      Accessories
Golf Clubs or Equipment        25                    10                       12
Binoculars and Spotting
                               53                     8                       10
        Scopes




                                        4
             Relationship of Day Visits at State Parks to Equipment Ownership
                                   (TAMU 1998 Survey)

                                           Table 2A
                                Percentage Who Own Equipment

                                No Day Visits            1 - 5 Day Visits          6 or More Day Visits
         Item
                                 (n=1,720)                  (n=1,050)                    (n=216)
Fishing Tackle and Boat
                                       48%                    65%                         80%
      Accessories
 Hunting and Firearms
                                       35                      45                          61
      Equipment
  Exercise Equipment                   53                      64                          66
 Camping or Picnicking
                                       46                      70                          86
     Equipment
 Bicycles and Bicycling
                                       49                      63                          69
      Accessories
Golf Clubs or Equipment                21                      28                          39
Binoculars and Spotting
                                       46                      60                          73
        Scopes



                                       Table 2B
                Percentage Who Purchased Equipment in the Past 12 Months

                                             No Day Visits      1 - 5 Day Visits    6 or More Day Visits
                Item
                                              (n=1,690)            (n=1,050)              (n=215)
 Fishing Tackle and Boat Accessories             43%                 52%                    73%
   Hunting and Firearms Equipment                 27                   35                    45
         Exercise Equipment                       34                   40                    39
  Camping or Picnicking Equipment                 30                   40                    67
  Bicycles and Bicycling Accessories              30                   36                    44
      Golf Clubs or Equipment                     35                   42                    54
   Binoculars and Spotting Scopes                 13                   19                    23




                                                   5
                                      Table 2C
         Percentage Who Intended to Purchase Equipment in the Next 12 Months

                          No Day Visits       1 - 5 Day Visits   6 or More Day Visits
         Item
                           (n=1,690)             (n=1,030)             (n=215)
Fishing Tackle and Boat
                              31%                  44%                  63%
      Accessories
 Hunting and Firearms
                               13                   18                   29
      Equipment
  Exercise Equipment           20                   23                   26
 Camping or Picnicking
                               23                   36                   60
     Equipment
 Bicycles and Bicycling
                               20                   25                   32
      Accessories
Golf Clubs or Equipment        9                    15                   26
Binoculars and Spotting
                               7                    12                   19
        Scopes




                                          6
         Relationship of Overnight Visits at State Parks to Equipment Ownership
                                   (Tamu 1998 Survey)

                                            Table 3A
                                 Percentage Who Own Equipment

                            No Overnight Stays          1 - 5 Overnight Stays       6 or More Overnight
         Item
                                (n=2,368)                      (n=495)                 Stays (n=129)
Fishing Tackle and Boat
                                     53%                         66%                       80%
      Accessories
 Hunting and Firearms
                                       38                        45                         60
      Equipment
  Exercise Equipment                   56                        65                         70
 Camping or Picnicking
                                       52                        76                         88
     Equipment
 Bicycles and Bicycling
                                       52                        68                         69
      Accessories
Golf Clubs or Equipment                23                        29                         36
Binoculars and Spotting
                                       50                        61                         71
        Scopes




                                       Table 3B
                Percentage Who Purchased Equipment in the Past 12 Months

                                            No Overnight Stays    1 - 5 Overnight     6 or More Overnight
                 Item
                                                (n=2,368)         Stays (n=498)          Stays (n=129)
  Fishing Tackle and Boat Accessories             46%                   55%                  73%
   Hunting and Firearms Equipment                  29                    40                      46
          Exercise Equipment                       35                    43                      40
   Camping or Picnicking Equipment                 31                    55                      68
  Bicycles and Bicycling Accessories               30                    43                      47
       Golf Clubs or Equipment                     36                    49                      59
    Binoculars and Spotting Scopes                 14                    23                      21




                                                    7
                                      Table 3C
         Percentage Who Intended to Purchase Equipment in the Next 12 Months

                          No Overnight Stays       1 - 5 Overnight Stays   6 or More Overnight
         Item
                              (n=2,325)                   (n=488)             Stays (n=127)
Fishing Tackle and Boat
                                34%                        47%                    64%
      Accessories
 Hunting and Firearms
                                 14                         20                     26
      Equipment
  Exercise Equipment             20                         29                     25
 Camping or Picnicking
                                 25                         47                     63
     Equipment
 Bicycles and Bicycling
                                 20                         33                     33
      Accessories
Golf Clubs or Equipment          11                         19                     24
Binoculars and Spotting
                                  8                         15                     16
        Scopes




                                               8
                      Relationship of Outdoor Recreation Participation
                         Close to Home and Equipment Ownership
                                    (TAMU 1998 Survey)


                                          Table 4A
                               Percentage Who Own Equipment

                                                         One or Twice a
                                                              Year         About Once a   Once a Week
                                      Not at All
               Item                                    or Less Than Once      Month       Almost Daily
                                      (n=1,055)
                                                            a Month          (n=485)       (n=554)
                                                            (n=880)
Fishing Tackle and Boat Accessories     43%                  62%              68%            62%
 Hunting and Firearms Equipment          32                   42               49             46
       Exercise Equipment                47                   64               64             65
 Camping or Picnicking Equipment         39                   64               73             69
Bicycles and Bicycling Accessories       39                   62               69             65
     Golf Clubs or Equipment             18                   28               27             31
  Binoculars and Spotting Scopes         44                   56               62             57




                                      Table 4B
               Percentage Who Purchased Equipment in the Past 12 Months

                                                         One or Twice a
                                                                                          Once a Week
                                      Not at All             Year        About Once a
               Item                                                                       Almost Daily
                                      (n=450)          or Less Than Once Month (n=300)
                                                                                            (n=330)
                                                        a Month (n=500)
Fishing Tackle and Boat Accessories     37%                  47%              57%            64%
 Hunting and Firearms Equipment          23                   30               35             43
       Exercise Equipment                33                   34               40             42
 Camping or Picnicking Equipment         27                   36               50             44
Bicycles and Bicycling Accessories       26                   32               38             40
     Golf Clubs or Equipment             32                   36               48             48
  Binoculars and Spotting Scopes         13                   14               20             22




                                                   9
                                      Table 4C
         Percentage Who Intended to Purchase Equipment in the Next 12 Months

                                                          One or Twice a
                                                                            About Once a   Once a Week
                                      Not at All              Year
               Item                                                            Month       Almost Daily
                                      (n=1,040)         or Less Than Once
                                                                              (n=480)       (n=545)
                                                         a Month (n=870)
Fishing Tackle and Boat Accessories     25%                   39%              49%            50%
 Hunting and Firearms Equipment          10                    15               22             22
       Exercise Equipment                17                    22               28             25
 Camping or Picnicking Equipment         18                    30               45             42
Bicycles and Bicycling Accessories       17                    23               29             28
     Golf Clubs or Equipment              8                    13               17             18
  Binoculars and Spotting Scopes          8                    10               13             11




                                                   10
                                          Table 5A
Relationship of Day Visits at State Parks to Equipment Ownership (September 1996 Survey)

                           No Day Visits             1 - 5 Day Visits       6 or More Day Visits
         Item
                             (n=202)                     (n=513)                  (n=681)
         Tent                  50%                         61%                     68%
     Fishing Boat               25                          19                      33
      Binoculars                75                          74                      77
     Hiking Boots               44                          50                      63
    Spotting Scope              8                            7                      12
      Camp Stove                57                          59                      66
     Canoe/Kayak                5                            5                       8
   Ski/Pleasure Boat            13                          13                      22
       Ice Chest                95                          96                      97
  Personal Watercraft           8                            7                      11
   Fishing Equipment            81                          72                      80
       Backpack                 45                          48                      59
     Sleeping Bag               75                          82                      86

                                         Table 5B
         Relationship of Overnight Visits at State Parks to Equipment Ownership
                                (September 1996 Survey)

                        No Overnight Visits        1 - 5 Overnight Visits   6 or More Overnight
         Item
                            (n=419)                       (n=414)              Visits (n=564)
         Tent                  41%                         77%                     69%
     Fishing Boat               26                          28                      28
      Binoculars                70                          74                      80
     Hiking Boots               44                          62                      59
    Spotting Scope              10                           9                      10
      Camp Stove                43                          67                      74
     Canoe/Kayak                5                            5                       8
   Ski/Pleasure Boat            15                          14                      22
       Ice Chest                95                          97                      97
  Personal Watercraft           8                            8                      12
   Fishing Equipment            71                          75                      84
       Backpack                 42                          59                      56
     Sleeping Bag               73                          88                      85



                                              11
                                       Table 6A
   Relationship of Day Visits at State Parks to Equipment Ownership (September
                                     1997 Survey)

                         No Day Visits             1 - 5 Day Visits       6 or More Day Visits
       Item
                           (n=196)                     (n=322)                  (n=340)
       Tent                  57%                         67%                     70%
   Fishing Boat               15                          25                      33
    Binoculars                73                          75                      82
   Hiking Boots               54                          59                      67
  Spotting Scope              11                          11                      14
   Camp Stove                 62                          67                      73
   Canoe/Kayak                6                           10                      12
 Ski/Pleasure Boat            12                          14                      26
     Ice Chest                97                          98                      97
Personal Watercraft           9                            9                      16
Fishing Equipment             75                          80                      80
    Backpack                  45                          58                      62
   Sleeping Bag               80                          85                      88

                                       Table 6B
       Relationship of Overnight Visits at State Parks to Equipment Ownership
                              (September 1997 Survey)

                      No Overnight Visits        1 - 5 Overnight Visits   6 or More Overnight
       Item
                          (n=346)                       (n=260)              Visits (n=258)
       Tent                  59%                         79%                     61%
   Fishing Boat               24                          27                      28
    Binoculars                74                          76                      82
   Hiking Boots               57                          67                      61
  Spotting Scope              14                          11                      12
   Camp Stove                 56                          78                      74
   Canoe/Kayak                9                           10                      10
 Ski/Pleasure Boat            16                          18                      23
     Ice Chest                97                          99                      98
Personal Watercraft           7                           11                      19
Fishing Equipment             74                          81                      83
    Backpack                  54                          70                      47
   Sleeping Bag               83                          92                      80


                                            12
Analysis of the Comptroller's Estimates of             (e)(2) "Sporting goods" means an item of
Sales Tax Revenues Attributable to                   tangible personal property designed and sold
Sporting Goods                                       for use in a sport or sporting activity,
                                                     excluding apparel and footwear except that
     The only information received by the            which is suitable only for use in a sport or
Comptroller on sales taxes from the retailer         sporting activity, and excluding boardgames,
outlets that collect them are the retailers'         electronic games and similar devices, aircraft
gross receipts and their gross receipts which        and powered vehicles, and replacement parts
are subject to sales tax. No data are                and accessories for any excluded item.
provided regarding the types of goods sold.
Hence, the Comptroller has no means of                    The Comptroller's estimates shown in
directly measuring how much of the total             Table 7 relate only to sports equipment.
sales taxes received by the State are derived        They do not include apparel and footwear
from sporting goods.                                 that is suitable only for use in a sport or
                                                     sporting activity which is referenced in
     In lieu of hard data, the Comptroller's         clause (e)(2) above. Tables 8 and 9 report
estimates of sales tax revenues have been            data for apparel and footwear from the same
derived from results of an annual survey of          NSGA report from which the sports
the sporting goods market undertaken by the          equipment data in Table 7 are derived. The
National Sporting Goods Association                  Texas Outdoor Recreation Association
(NSGA). Data are obtained from a survey of           (TORA), whose members include the major
five representative panels of 20,000                 distributors and retailers of sporting goods in
households each maintained by National               Texas (for example, Academy and
Family Opinion Inc. In total, 59 products            Oshman's), identified a number of footwear
are included in the study, and replies to the        and apparel items that do meet the law's
surveys are typically received from                  criterion of being "suitable only for use in a
approximately 75% of the 100,000 sample.             sport or sporting activity." These are shown
                                                     in bold type in Tables 8 and 9. If the items
     The estimates of sales tax revenue              shown in bold type in these tables are
attributable to sporting goods for 1996 used         included, then the added sales tax from
by the Comptroller are shown in Table 7.             footwear amounts to $3.85 million (which
Four sources of data lead to the conclusion          includes 25% of the sales of hunting boots,
that they are substantial underestimates.            as noted in footnote 3 of Table 8), and $7.6
These sources are discussed in the following         million from apparel (which includes one
paragraphs.                                          third of skiing apparel sales as noted in
                                                     footnote 4 of Table 9).
1. The sporting goods tax enabling
legislation specified in S 151.801 of the
Texas Statues states:

 (c)(2) The comptroller shall not credit in
excess of $32 million in sporting goods tax
revenue annually to the Parks and Wildlife
Department.


                                                13
                                                                     Table 7
                                The Comptroller's Estimates of Sales Tax Revenues Attributable to Sporting Goods
                                                            (1996 Data in Thousands)


                      Item                           U.S. Value      % Regional Share 1   SWC Region    Texas Value 2   Sales Tax Received 3

Archery Equipment
Bows                                                   $143,081.00          11             $15,739.00    $10,325.00               $645.00
Arrows & Accessories                                   $129,270.00          11             $14,220.00     $9,328.00               $538.00
Baseball & Softball
Gloves & Mitts                                         $146,136.00          9.7            $14,175.00      $9,298.00              $581.00
Baseballs & Softballs                                   $51,030.00          15.8            $8,063.00      $5,289.00              $330.00
Aluminum Bats                                           $90,200.00          11.3           $10,174.00      $6,674.00              $417.00
Basketball Equip
Basketballs                                             $86,471.00          12.4           $10,722.00      $7,034.00              $439.00
Backboards                                             $111,900.00          12.4           $13,875.00      $9,102.00              $569.00
Bicycling
Mountain Bicycles                                      $779,680.00          10.4           $81,087.00    $53,192.00             $3,324.00
Bicycling Helmets                                      $135,662.00          10.4           $14,108.00     $9,255.00              $578.00
Bowling Equipment
Balls                                                  $131,340.00          8.7            $11,426.00      $7,495.00              $468.00
Bags                                                    $22,600.00          8.7             $1,966.00      $1,290.00               $81.00
Camping Equipment
Heaters Gas/Propane                                      $8,376.00          14.1            $1,181.00      $774.00                 $48.00
Lanterns Gas/Propane                                    $34,050.00          12.6            $3,786.00     $2,484.00               $155.00
Sleeping Bags                                          $206,867.00          10.6           $21,927.00    $14,384.00               $899.00
Tents 3 person or more                                 $184,757.00          10.2           $19,214.00    $12,604.00               $787.00
Backpacks                                              $239,745.00          8.9            $21,337.00    $13,997.00               $874.00
Tents 1-2 person                                        $61,821.00          5.5             $3,400.00     $2,230.00               $139.00
Camping stoves, Ice Chests
Jugs, Coolers, Lanterns (Bat)                          $361,671.00          9.3            $33,744.00    $22,136.00             $1,383.00
Darts
Darts                                                   $25,888.00          17.5            $4,530.00      $2,972.00              $185.00

                                                                     14
Exercise Equipment
Free weight/ Weight sets                         $171,724.00          9.2    $15,789.00    $10,363.00    $647.00
Glider/ Riders                                   $574,038.00          9.1    $49,780.00    $32,655.00   $2,040.00
Cross Country Ski Exercisers                     $166,738.00          8.9    $14,839.00     $9,734.00    $608.00
Abdominal Exercisers                             $368,478.00          8.9    $32,794.00    $21,513.00   $1,344.00
Stationary Exercise Bicycles                     $155,384.00          7.7    $11,964.00     $7,848.00    $490.00
Treadmills                                      $1,186,862.00         6.9    $81,893.00    $53,722.00   $3,357.00
Multipurpose Home Gyms                           $293,970.00          5.6    $16,462.00    $10,799.00    $674.00
Stair Climber                                      $45,996.00         3.1     $1,425.00      $935.00       $58.00
Aerobic Step-ups/ Boxes
Fitness Videos
Hand Weights
Rowing Machines
Weight Benches
Jump Ropes
Spring Tension Exercisers                        $289,200.00          7.7    $22,134.00    $14,513.00    $907.00
Fishing Tackle
Reels (Separate)                                  $98,243.00         13.8    $13,557.00     $8,894.00    $555.00
Rod-Reel Combination                             $239,844.00         12.7    $30,460.00    $19,982.00   $1,248.00
Rods Separate                                    $110,390.00         13.0    $14,351.00     $9,414.00    $588.00
Tackle Boxes                                      $42,850.00         13.0     $5,570.00     $3,654.00    $229.00
Lures                                            $185,150.00         13.0    $24,069.00    $15,789.00    $987.00
Lines, Terminal Tackle, and other accessories     $48,480.00         13.0     $6,302.00     $4,134.00    $258.00
Golf Equipment
Golf Balls                                       $830,671.00         10.1    $83,897.00    $55,036.00   $3,439.00
Golf Club Sets                                  $2,015,869.00         7.6   $153,206.00   $100,503.00   $6,281.00
Golf Club Individual                             $403,502.00          6.1    $24,613.00    $16,146.00   $1,009.00
Golf Bags                                        $310,040.00          8.8    $27,160.00    $17,816.00   $1,113.00
Hockey & Ice Skate Equipment
Ice Hockey Sticks                                 $46,441.00          7.5     $3,483.00     $2,284.00    $142.00
Ice Hockey Skates
Figure Skates                                    $141,550.00          7.5    $10,616.00     $6,964.00    $435.00
Hunting & Firearm Equipment
Handguns                                         $667,826.00         16.4   $109,523.00    $71,847.00   $4,490.00


                                                                15
Shotguns                                               $429,122.00                   9.3           $39,908.00     $26,179.00    $1,636.00
Rifles                                                 $451,513.00                   8.1           $36,572.00     $23,991.00    $1,499.00
Reloading Equipment                                     $47,560.00                  12              $5,707.00      $3,744.00     $234.00
Other Hunting & Firearm Equip & Ammunition             $832,440.00                  12             $99,893.00     $65,530.00    $4,096.00
In-Line Skates & Wheel Sports
In-line Protective pads/ gloves                         $70,960.00                  14.1           $10,005.00      $6,564.00     $410.00
In-line Wheel Hockey Sticks                             $31,787.00                  13.7            $4,355.00      $2,857.00     $178.00
In-line Wheel Skates                                   $418,191.00                  10.2           $42,655.00     $27,981.00    $1,748.00
Rollerskates & Skateboards                              $37,500.00                  11.0            $4,106.00      $2,693.00     $168.00
Optics
Sunglasses (Nonprescription)                           $476,621.00                  10.2           $48,615.00     $31,891.00    $1,993.00
Binoculars                                             $196,340.00                   6.5           $12,762.00      $8,371.00     $523.00
Soccer Balls
Soccer Balls                                            $55,315.00                   9.9            $5,476.00      $3,592.00     $224.00
Tennis Equipment
Tennis Rackets                                         $162,535.00                   6.2           $10,077.00      $6,610.00     $413.00
Tennis Balls                                            $77,370.00                   6.2            $4,796.00      $3,146.00     $179.00
Volleyballs/ Badminton
Volleyballs                                             $21,167.00                  16.8             $3,556.00     $2,333.00     $145.00
Badminton                                                $8,722.00                   4.7              $409.00       $268.00        $16.00
                       Totals                       $14,633,934.00                               $1,337,170.00   $910,209.00   $56,867.00

1. Regional share is given in the report for some items in each component category.
The share for the other items was derived by using a weighted average within the category.
2. Texas Value was derived by applying the ratio of Texas population to the SWC regional value
(SWC region is composed of Arkansas, Louisiana, Oklahoma, and Texas).
3. State Sales Tax was derived by multiplying Texas Value by .0625.




                                                                        16
                                            Table 8
        Value of Footwear That is Suitable Only for Use in a Sporting Activity (bold type)
                                     (1996 Data in Millions)



             Item             U.S. Value % Regional SWC Value Texa Value1 Sales Tax2
   Aerobic Shoes                    $401.2       11      $44.1      $28.9        $1.8
   Baseball/ Softball Shoes         $246.9     13.8      $32.1      $21.1        $1.3
   Basketball Shoes               $1,192.1       14     $166.9     $109.5        $6.8
   Boat/ Deck Shoes                   $225     10.1      $22.5      $14.8        $0.9
   Bowling Shoes                     $43.4     11.1       $4.7       $3.1        $0.2
   Cheerleading Shoes                $50.2       14       $7.0       $4.6        $0.3
   Cross Training Shoes           $1,416.9     12.3     $174.3     $114.3        $7.1
   Fitness Shoes                    $325.1     10.8      $35.1      $23.0        $1.4
   Football Shoes                    $94.6     14.3      $13.5       $8.9        $0.6
   Golf Shoes                       $230.6      7.6      $17.5      $11.5        $0.7
   Gym Shoes/ Sneakers            $1,995.7      8.2     $163.6     $107.3        $6.7
   Hiking Shoes/ Boots            $1,037.8      9.7     $100.7      $66.1        $4.1
   Hunting Boots 3                  $164.8      6.6      $10.8       $7.1        $0.5
   Jogging/ Running Shoes         $1,132.2     11.3     $127.9      $83.9        $5.2
   Soccer Shoes                     $187.4      5.9      $11.0       $7.2        $0.5
   Sport Sandals                    $367.6     10.2      $37.5      $24.6        $1.5
   Tennis Shoes                       $541     15.1      $81.7      $53.6        $3.3
   Volleyball Shoes                  $47.3      4.9       $2.3       $1.5        $0.1
   Walking Shoes                  $3,078.7      9.6     $295.5     $193.8       $12.1
   Water Sport Shoes                   $37      7.7       $2.8       $2.1        $0.1
            Totals              $12,815.5             $1,351.6     $886.8       $55.4

Source: National Sporting Goods Association. Sporting Goods Market in 1997 Based on 1996
Sales.

1. Texas Value was derived by applying the ratio of Texas population to the SWC regional value
(SWC region is composed of Oklahoma, Arkansas, Louisiana, and Texas).
2. State Sales Tax was derived by multiplying Texas Value by .0625.
3. TORA estimates that 25% of all hunting boots are waders. The Association believes that
waders qualify as "sporting goods" under the definition in the legislation.




                                              17
                                                Table 9
        Value of Athletic and Sport Clothing That is Suitable Only for Use in a Sport or Sporting


                               Activity (bold type) (1996 Data in Millions)

                 Item                      U.S. Value                Texas Value 1        Sales Tax Received 2
    Aerobic Exercising                               $815.9                       $59.1                    $3.7
    Bicycling                                        $879.7                       $63.7                    $4.0
    Bowling                                          $579.1                       $41.9                    $2.6
    Camping                                        $1,294.2                       $93.8                    $5.9
    Fishing                                          $902.4                       $65.4                    $4.1
    Golf                                           $1,607.8                     $116.5                     $7.3
    Hunting 3                                      $1,047.3                       $75.9                    $4.7
    Martial Arts                                      $318                        $23.1                    $1.4
    Running/ Jogging                                 $706.8                       $51.2                    $3.2
    Skiing (Alpine) 4                                $806.2                       $58.4                    $3.7
    Skiing (Cross Country) 4                         $137.9                       $10.0                    $0.6
    Swimming                                       $1,762.5                       $55.2                    $3.5
    Tennis                                           $269.6                       $19.5                    $1.2
                Totals                            $1,1127.4                     $733.7                    $45.8

Source: National Sporting Goods Association. Sporting Goods Market in 1997 Based on 1996
Sales.

1. Texas Value was derived by dividing the U.S. population by the Texas population i.e.,
19439/268765 = .0725.
2. State Sales Tax was derived by multiplying Texas value by .0625.
3. TORA estimate that over 90% of hunting clothing is used only in the context of hunting.
4. TORA estimate that approximately one-third of ski-clothing sales are in ski goggles, ski-suit
bottoms, and ski-gloves, which they believe qualify as "sporting goods" under the definition in the
legislation.




                                                   18
2. An alternative set of estimates of sporting          age and older who responded to questions
equipment sales is provided by the Sporting             concerning their purchasing behavior.
Goods Manufactures Association (SGMA).
Their estimates are based on manufactures                       Table 10 compares the Texas data in
shipments and are reported in wholesale                 this survey with those derived from the
dollar values rather than retail value. Using           NSGA survey. The difference in estimates
almost identical categories to those used by            of value of fishing equipment sold to Texans
the NSGA, the SGMA reported 1996 U.S.                   in 1996 is dramatic. According to the
wholesale sales of $16.395 billion which                NSGA data, State sales tax receipts on this
compares to the $14.633 billion figure for              equipment amount to $3.865 million (Table
retail sales value shown in Table 7. If a retail        7), but based on the U.S. Fish and Wildlife
mark-up of 20%-25% is added to the                      data shown in Table 10 these receipts total
$16.395 billion, then the retail value                  $22.14 million! Table 11 offers further
approximates $20 billion which is over one-             evidence of underestimation in that it
third higher than the number reported in                identifies categories of fishing equipment that
Table 7. Thus, if the comptroller used the              are not included in the NSGA data, but
SGMA rather than the NSGA data to                       which do qualify for the sporting goods tax.
compile estimates, then the estimate of sales
tax received by the State from sporting                         Another survey produced for the
goods would be approximately $75 million                International Association of Fish and Wildlife
rather than the $58.867 million shown in                Agencies by the U.S. Fish and Wildlife
Table 7.                                                Service provided economic data on hunting.
                                                        The report was entitled "The Economic
3. The NSGA estimates of fishing and                    Importance of Hunting." Its estimate of U.S.
hunting equipment sales are substantially               sales of rifles in 1996 was $1.3 billion, which
lower than those derived from reputable                 was almost three times larger than the NSGA
surveys undertaken by others. Table 10                  figure of $451 million (Table 7). The other
reports data from the 1996 National Survey              item which was comparable between the two
of Fishing, Hunting, and Wildlife Associated            studies was reloading equipment. The
Recreation conducted by the U.S. Fish and               NSGA estimate of U.S. sales was $47.6
Wildlife Service. Information contained in              million, while the U.S. Fish and Wildlife
the National Survey is based on a sample size           estimate was $232.1 million.
of 28,000 U.S. sportsmen 16 years of




                                                   19
                                      Table 10
              Value of Fishing Equipment Purchases in Texas ($ Millions)

            Item                      NSGA Estimate        US Fish & Wildlife Estimate
Rods, Reels, Poles, and Rod
                                            38.3                     235.1
   Making Equipment
Lines, Terminal Tackle, and
                                            4.1                       57.0
    Other Accessories
           Lures                            15.8                      52.6
       Tackle Boxes                         3.6                        9.5




                                       Table 11
Estimates of Fishing Equipment Sales in Texas on Items Not Included in the NSGA Data

                        Item                                   Sales Value
Creels, Stringers, Fish Bags, Landing Nets, and Gaff
                                                               $5,678,133
                        Hooks
     Minnow Traps, Seines, and Bait Containers                 $5,729,368
  Depth Finders, Fish Finders, and Other Electronic
                                                               $12,725,424
                  Fishing Devices
              Other Fishing Equipment                         $104,230,896




                                             20
4. The NSGA survey is based on reports                        them that provided by the NSGA.
from consumers. TORA has provided an
estimate of Texas sales of sports equipment             (2)   That the NSGA estimates are very
items using the same categories as the                        low. Indeed, when the results of this
NSGA survey, based on their direct                            report were shared with the NSGA's
experiences as retailers of these items. These                vice president of information and
are shown in Table 12. The TORA estimates                     research, he commented, "NSGA
are $261 million higher than those of the                     numbers seem low and I am having
NSGA survey, and the additional tax from                      our research company review the
sporting goods accruing to the State based                    projection technique." The real tax
on this estimate is $16.3 million. The TORA                   contribution from sporting goods to
estimates of fishing tackle, which accounts                   Texas is extimated to be $84.6
for much of the increase over the NSGA                        million rather than the almost $57
figures, are much closer to the U.S. Fish and                 million currently estimated by the
Wildlife data, which suggests they are more                   Comptroller's office. This range is
credible. The higher TORA statistics are                      derived from the following sources
partially attributable to the inclusion of many               described in the paper:
additional accessory items which are not
included in the set of 59 sporting equipment           NSGA sports equipment
products that constitutes the NSGA survey.             estimate                     56.87
                                                       NSGA footwear estimate        3.85
                                                       NSGA apparel estimate         7.60
Implications of the Analysis                           TORA estimate on
                                                       same NSGA items              16.29
        One of the considerations in shifting                              $        84.61 million
the designated source of general fund
revenues for parks from the cigarette tax to
the tax on sporting goods was that the latter
was likely to grow while revenues from the
former were declining. Hence, the sporting
goods tax was seen as a potential mechanism
for future funding increases for parks created
by increased usage and services, and the
costs attributed to these increased demands
and to inflation. As demands grew so would
revenue from the sporting goods sales tax, so
there was logic in using these tax revenues to
pay for the additional costs.

       This report has shown:

 (1)   There is no alternative source of data
       for annually estimating the State's
       receipts from sporting goods taxes

                                                  21
                                    Table 12
    Comparison of the NSGA and TORA Estimates of Sporting Goods Sales in Texas
                                 ($Thousands)

                                  NSGA Estimate of Sales TORA Estimate of Sales
             Item                                                                 Difference
                                       in Texas               in Texas

      Archery Equipment                  19,653                  13,041            (6,612)

Baseball and Softball Equipment          21,261                  74,140            52,879

     Basketball Equipment                16,136                  44,926            28,790

   Bicycling and Accessories             62,447                  42,044           (20,403)

      Bowling Equipment                   8,785                  1,307             (7,478)

   Camping and Accessories               68,609                 138,509            69,900

    Darts, Dartboards, and
                                          2,972                  6,218              3,246
         Accessories

      Exercise Equipment                 162,082                123,328           (38,754)

Fishing Tackle and Accessories           61,867                 315,900            254,033

     Golf and Accessories                189,501                 98,413           (91,088)

      Hockey Equipment                    9,248                  3,743             (5,505)

Hunting and Firearm Equipment            191,291                223,014            31,723

            Optics                       40,262                  20,472           (19,790)

      Soccer Equipment                    3,592                  11,409             7,817

    Tennis and Accessories                9,756                  11,720             1,964

             Total                                                                 260,722

                         Additional Texas State Sales Tax @ .0625 = $16,295




                                                   22
         This estimate ignores the SGMA data          1996 to .0028 in 1997. This decline has
since its inclusion would lead to some                occurred even though substantial increases in
double-counting with the TORA estimates.              sporting goods tax receipts during this
But the SGMA data do support the TORA                 period were reported by NSGA and all the
figures and provide further evidence that the         other estimates that were reviewed.
NSGA estimates are too low.
                                                              Table 14 shows the funding
        The logic for attaching future                implications for parks of applying alternative
increases to numbers that are obviously               percentage rates to the FY 1997 total State
inaccurate appears to be flawed. A more               sales tax receipts. Adopting the historical
direct and easily measurable alternative              ratio of .003 which reflects the situation
would be to tie future increases in the               when the sporting goods tax was first
sporting goods sales tax allocated to parks to        designated, would result in park funding of
total State sales tax receipts. Total State           $34.02 million based on FY 1997 sales data.
sales tax receipts for the past five years are        The use of this type of ratio meets the
shown in Table 13.                                    original intent of linking incremental biannual
                                                      increases in park funding with increases in
        The data in Table 13 show that the            sales tax revenues received from sporting
share of the State's sales tax receipts               goods.
allocated to parks has declined from .003 in




                                                 23
                                       Table 13
Sporting Goods Tax Allocations to Parks as a Percentage of Total State Sales Tax Receipts

                           Sporting Goods Tax         Total State Sales Tax
           Year            Allocation to Parks              Receipts 1                 %
                               ($ Millions)               ($ Millions)
           1996                    $32                      $10,791                  .0030
           1997                    $32                      $11,340                  .0028

1
    Source: State of Texas Annual Cash Report for the Year Ending 8-31-97




                                       Table 14
Allocations to Parks Which Would Accrue from Applying Alternative Ratios to the State’s
                         Total Sales Tax Receipts for FY 1997

                       Ratio                                  Park Allocation ($ Millions)
                       .0030                                             $34.02
                       .0035                                             $39.69
                       .0040                                             $45.36
                       .0045                                             $51.03
                       .0050                                             $56.70
                       .0055                                             $62.37
                       .0060                                             $68.04




                                                 24

				
DOCUMENT INFO
Description: Federal Sporting Goods Tax document sample