Excise Tax Snapshot: Fiscal Year 2020

Excise Tax Snapshot: Fiscal Year 2020

The Wildlife Management Institute (supported by a Multi-State Conservation Grant) provides you with this quarterly snapshot of the excise tax collections to help you understand the health of the American System of Conservation Funding. This system of funding was established in the 1930s and expanded and perfected over the past 40+ years. This reliable source of annual funding for state fish and wildlife agencies represents a unique partnership between the agencies and the hunting, shooting sports, angling, and boating industries. In rough national numbers, these excise tax deposits made by the partner industries represent about half of the state fish and wildlife agencies’ annual budget. That said, there are a number of state fish and wildlife agencies that enjoy other sources of funding (i.e., state level appropriations, specific sales tax additions, lottery funds, etc.). Regardless of other funding sources, the funding generated and made available to state wildlife agencies is substantial. Therefore, it is imperative to conservation that agencies (from the commissioners down to the field biologists) understand the industry trends and work with these industries to ensure a strong income flow going forward.

A family fishing

The following numbers cover the 2020 federal fiscal year (October 1, 2019 thru September 30, 2020) and compare those numbers to the collections for fiscal year 2019. These numbers are provided by the U.S. Fish and Wildlife Service that gets them directly from the two collection agencies (the Internal Revenue Service and the Tax and Trade Bureau).

As you review these numbers, one point to keep in mind is the COVID-19 related impacts we are experiencing. We are continuing to see the impact of the virus in the excise tax arena – both from direct impacts on the industry as well as delayed filing timelines provided by the Department of the Treasury. Hopefully, in the coming quarters we will see the virus-related delays disappear.

The collections for the Sport Fish Restoration Account rebounded considerably from the last quarter summary and finished the federal fiscal year up by 13 percent. The most significant increases came in fishing equipment and rods (up 65 percent and 24 percent respectively). These numbers reflect the message we are hearing from fish and wildlife agencies across the country – they are seeing more families fishing during the pandemic. I suspect that throughout the summer, fishing equipment sales were up, and the big bounce from last quarter in fishing equipment was likely related more to the delays in tax filing provided by Treasury. One number that catches my eye is with fishing tackle boxes – which are showing a 54 percent decrease from 2019. I’m not sure what is behind that decrease.

The collections in the Wildlife Restoration Account exploded in the last quarter of the fiscal year and the year ended with a 15 percent increase over fiscal year 2019. The big increases were in the pistols/revolvers and ammunition categories, showing increases of 23 percent and 22 percent, respectively. These increases reflect the reports of increased gun sales that we have all heard. On the archery side, the numbers are not as positive. Both archery categories (archery equipment and arrow shafts) showed significant decreases over fiscal year 2019 numbers (-21 percent & -20 percent, respectively). Since the archery numbers may be more reflective of hunting activity, we all should be watching those numbers carefully.

Following is a closer look at the numbers.

The Sport Fish Restoration Account

The Trends:

Here are the comparisons of the collections for FY 2019 and FY 2020.

Trends Between Last and Current Fiscal Years      
Product FY 2019 (thru Qtr 4) FY 2020 (thru Qtr 4) % Change
Motorboat Fuel Tax $315,747,000 $313,749,000 -1%
Small Engine Fuel Tax $123,007,000 $123,751,000 1%
Interest $23,168,942 $39,117,579 69%
Customs Duties $62,585,622 $57,110,888 -9%
Fishing Equipment $105,251,517 $173,656,129 65%
Electronic Boat Motors $5,975,069 $7,008,506 17%
Fishing Tackle Boxes $1,923,066 $889,372 -54%
Fishing Rods and Poles $22,102,708 $27,440,549 24%
Total Sportfish & Boating Restoration $659,760,924 $742,723,023 13%

The Funding Sources:

It is important to understand where these numbers come from, how they relate to past numbers, and how the individual funding sources relate to the overall funding available. The following pie-chart provides a strong reference of how important funding sources that are not directly related to fishing equipment (motorboat and small engine fuel taxes; customs duties; interest) are to the support of state agencies’ aquatic conservation efforts (58.9 percent of the total funding). .

SFRA trends graph Q4 2020

Wildlife Restoration Account

The Trends:

Here are the comparisons of the collections for the first three quarters of FY 2019 and FY 2020.

Trends Between Last and Current Fiscal Years      
Product FY 2019 (thru Qtr 4) FY 2020 (thru Qtr 4) % Change
Pistols & Revolvers $190,292,572 $233,824,726 23%
Firearms $190,240,227 $205,748,392 8%
Shells & Cartridges $185,712,788 $225,804,951 22%
Archery Equipment $39,710,877 $31,545,676 -21%
Arrow Shafts $8,326,061 $6,687,762 -20%
Total Wildlife Restoration $614,282,525 $703,611,507 15%

The Funding Sources:

An important piece of information that we must not overlook in this collection data is the source of the funds. Roughly speaking, less than 6 percent of the collections are coming from archery and 33.2 percent is coming from pistols and revolvers, 29.2 percent from firearms and 32.1 percent from ammunition. Those that watch these quarter summaries closely may have noted that the percentage from pistols and ammunition are creeping up. This is an important bit of information when you think about how important recreational shooting ranges are in the overall model for conservation funding. Here is a pie chart that shows this a bit more dramatically:

WRA trends graph for Q4 2020


As suspected, both the Sport Fish and Wildlife Restoration Funds made a strong recovery in the fourth quarter of fiscal year 2020. This is good news for state fish and wildlife agencies that depend heavily on these funding sources.

Stay strong and stay healthy.

Photo Credit
Paul Schultz, Flickr
November 16, 2020