Texas Sales Tax Revenue Totals Almost $3 Billion in July 2020

Texas Comptroller Glenn Hegar has announced that state sales tax revenue totaled $2.98 billion in July, 4.3% more than in July 2019.

The majority of July sales tax revenue is based on sales that were made in June and remitted to the agency in July.

Social distancing requirements were more relaxed across in Texas during June than in previous months.

"State sales tax collections in July were better than expected, increasing despite the high unemployment due to the pandemic," Hegar said. "The increase was due to a surge in collections from the retail trade sector; receipts from other major sectors - including mining, construction, wholesale trade, services and restaurants - showed significant declines.

According to Hegar, collections from e-commerce were up significantly because many consumers has chosen to shop online.

Hegar also said that increased time spent at home both for teleworking and staycations, in lieu of leisure travel, spurred sharply higher spending for home improvements.

"Collections from food and beverage stores also were up strongly, as consumers replaced purchases of alcohol from restaurants and bars with alcohol purchased for off-premise consumption (alcohol sales at bars and restaurants are subject to mixed beverage taxes, not sales and use tax)," Hegar said. "Collections from sporting goods stores also rose significantly, as consumers turned to home workouts, bicycling, boating, camping and other forms of outdoor recreation consistent with social distancing.

"With about 1.3 million Texans with continued claims for insured unemployment and another 184,000 receiving benefits under the Pandemic Unemployment Assistance program in June, it's likely that consumer spending was significantly supported by enhanced benefits provided by the federal CARES Act and related legislation enacted in response to the COVID-19 pandemic. With the expiration of these benefits at the end of July, consumer spending and sales tax collections may decline in coming months."

Total sales tax revenue for the three months prior to July 2020 was down 5.3% compared to the same period a year ago.

Sales tax accounts for 57% of all tax collections, making it the largest source of state funding for the state budget.

Here is the revenue collected by the state of Texas from other major taxes:

• Motor vehicle sales and rental taxes: $466 million, down 3.7% from July 2019
• Motor fuel taxes: $304 million, down 2.2% from July 2019
• Oil production tax: $187 million, down 40% from July 2019
• Natural gas production tax: $37 million, down 71% from July 2019
• Hotel occupancy tax: $34 million, down 42% from July 2019
• Alcoholic beverage taxes: $110 million, down 6.2% from July 2019

Fiscal 2020 franchise tax collections, which were deferred to July, totaled $4.17 billion, 4.8% more than in fiscal 2019 year-to-date, Hegar said.