First-Year Iowa Fireworks Sales Fizzle Against Projections

DES MOINES , IA — Sales of fireworks for the first fiscal year after Iowa law changed to allow purchase and use fell short of projections by nearly half the anticipated amount. The Iowa Department of Revenue had estimated $17.8 million in sales of fireworks in fiscal year 2017, but an examination of tax records showed sales only reached $9.9 million, the department reported today.

That means Iowa received just slightly more than half of the sales tax expected to flow into the general fund; $1.1 million in tax revenue was initially projected, but only $600,000 was collected.

Current year sales appear to be sizzling, rather than fizzling, however.

The state's original estimate for fiscal year 2018 sales, which ends June 30, is $24.8 million. But first-quarter sales — July 1 through Sept. 30 — reached two-thirds of the expected annual amount, at $16 million. That translated to $1 million in sales tax for the period. Sales and revenue figures are calculated quarterly.

By law, Iowans may purchase fireworks between June 1 and July 8 and Dec. 10 through Jan. 3. They are only allowed to be discharged at designated times around Independence Day and New Year's. In addition, cities can set restrictions
on sale and use, which likely affected the number and location of retailers, the state's report says.

The state data was based on an examination of tax records filed by retailers with “firework” or “pyrotechnic” in the business name. The Department of Revenue said in a news release that 51 permits were found among retailers selling only fireworks, while the State Fire Marshal's Office reported 665 consumer firework sales licenses issued statewide. That means 614 existing retailers received licenses and sold fireworks mostly during late June and early July.

Since permanent retailers do not report what share of their total sales were due to fireworks, the state used median taxable sales figures from firework-exclusive retailers who filed a return for the June quarter. The state calculated that each existing retailer had fireworks sales equal to the 25th percentile of firework-exclusive retailers, which amounted to the $9.9 million sales figure.

Photo by Melanie Hughes via Unsplash