HEGAR: Compared to May 2019, Sales Tax Collections Up 12.9%, and 30.1% Over May 2020

“Resurgent consumer spending drove monthly state sales tax collections to a new high.”

Texas Insider Report: AUSTIN, Texas – “Resurgent consumer spending drove monthly state sales tax collections to a new high,” Texas Comptroller Glenn Hegar said earlier today, announcing that State Sales Tax Revenue totaled $3.4 billion in May, the highest-ever monthly total and 30.1% more than in May 2020.

Compared to May 2019, sales tax collections were up 12.9%.
“Supported by the end of pandemic restrictions, further vaccination progress and declines in COVID-19 cases and hospitalizations, continued recovery in employment, and federal stimulus checks and enhanced unemployment benefits, receipts from all retail sectors other than grocery stores surpassed pre-pandemic levels," Hegar said (right.)

As with April’s results, year-over-year increases for most tax revenues this month and in the coming months will be among the highest in the history of the data series. This is due to base effects: year-ago revenue collections to which this year’s collections are compared were severely suppressed by the pandemic.

The majority of May sales tax revenue is based on sales made in April and remitted to the agency in May.

“Sales at retailers that had benefited from pandemic spending – online and big box general merchandisers, building materials and home furnishings stores, sporting goods and hobby stores – continued at elevated levels, while sales at retailers severely depressed last year, such as clothing stores and electronics and appliance stores, rebounded sharply from last spring,” said Hegar.

“Spending at restaurants also surpassed pre-pandemic levels, with increased dine-in patronage adding to still elevated take-out and delivery business. While total spending in the sector increased sharply from a year ago, the recovery was uneven, with business at large popular restaurant chains up sharply while many smaller venues continued to languish. Spending at theme parks and live entertainment venues, though remaining below pre-pandemic levels, also was up significantly from a year ago, while business at fitness centers showed little evidence of recovery.

“Receipts from oil- and gas-related sectors fell below year-ago levels, as drilling and well development activity remained substantially below pre-pandemic levels despite the rise in crude oil prices in recent months
,” Hegar said.

Total sales tax revenue for the three months ending in May 2021 was up 19.4% compared to the same period a year ago. Sales tax is the largest source of state funding for the state budget, accounting for 59% of all tax collections.

Texas collected the following revenue from other major taxes, all of which were up sharply from a year ago due to base effects:
  • alcoholic beverage taxes — $126 million, up 355% from May 2020, and up 8% from May 2019.
  • hotel occupancy tax — $48 million, up 509% from May 2020, and down 18% from May 2019;
  • motor fuel taxes — $315 million, up 42% from May 2020, and down 0.4% from May 2019;
  • motor vehicle sales and rental taxes — $554 million, a record monthly amount; up 109% from May 2020, and up 29% from May 2019;
  • natural gas production tax — $131 million, up 323% from May 2020, and up 1% from May 2019;and
  • oil production tax — $364 million, up 303% from May 2020, and down 1% from May 2019;