BISMARCK - North Dakota's taxable sales and purchases were up 8.9 percent in the fourth quarter of 2005 compared with fourth quarter 2004, marking the eleventh consecutive quarter of growth.
Taxable sales and purchases for October, November and December totaled more than $2.4 billion. That nearly was $200 million more than fourth quarter 2004's $2.2 billion performance, according to Tax Commissioner Cory Fong.
"The 8.9 percent increase is
2 ½ times the rate of inflation, which suggests real growth in our economy," Fong said.
Inflation for the period was 3.3 percent.
This boom in sales goes a long way toward explaining our state's large budget surplus.
I found this breakdown of growth by city especially interesting.
Of the four largest cities, Grand Forks sales grew slowest. Grand Forks taxable sales and purchases were up 0.75 percent in 2005 over 2004, compared with increases in Fargo of 6.3 percent; Minot, 7 percent, and Bismarck, 12.6 percent.
Grand Forks has a 1.75% sales tax.
Fargo has a 1.5% sales tax.
Minot has a 1% sales tax.
Bismarck also has a 1% sales tax.
So, basically, of North Dakota's four largest cities the two that experienced the slowest economic growth had the highest sales taxes. The two that had the fastest economic growth had lower sales taxes. There are other factors at play here, of course, but the point is clear: High tax burdens slow economic growth. Lower tax burdens encourage economic growth.
Which supports my idea for North Dakota's budget surplus: We should give the surplus back to the people it came from and then, on top of that, cut taxes where appropriate to ensure that the economic growth detailed above continues. Which, in turn, would mean that the increased tax receipts would continue as well.
Of course, North Dakota Democrats (along with some state Republicans) already have plans in place to spend this money. Which is ridiculous, but if they're going to spend the surplus they should at least give North Dakotans some tax relief.