Texas' May sales tax revenue down 13.2 percent due to COVID-19 impact

Sales tax is the largest source of state funding for the Texas state budget

Talk 1370 Newsroom
June 01, 2020 - 11:20 am
Coronavirus and Money

AUSTIN (Talk1370.com) -- Texas' sales tax revenue totaled $2.61 billion in May, a drop of 13.2 percent compared to May 2019, as the coronavirus continued to wreak havoc on the state economy.

Texas Comptroller Glenn Hegar revealed the data Monday morning. For the second month in a row, state sales tax collections have seen the steepest drop since January 2010, following April's decline of 9.3 percent.

"Significant declines in sales tax receipts were evident in all major economic sectors, with the exception of telecommunications services," Hegar said in a statement. "The steepest decline was in collections from oil and gas mining, as energy companies cut well drilling and completion spending following the crash in oil prices."

May's collections were based on sales made in April and remitted to the Comptroller's office in May. During the month of April, social distancing was widespread across the entire state.

"The business closures and restrictions and stay-at-home orders due to the COVID-19 pandemic spurred deep drops in collections from restaurants, amusement and recreation services, and physical retail stores," Hegar said. "These declines were offset in part by increases from big box retailers and grocery stores that remained open as essential businesses, online retailers and restaurants that could readily pivot to takeout and delivery service."

Hegar says business activity appears to be rebounding in May as state and local government social distancing orders began to ease. However, with most operations at reduced capacity, there will be continued reductions in employment, income, and activity that is subject to sales tax for months to come.

Sales tax is the largest source of funding for the state's budget, representing 57 percent of all tax collections.

Other state tax collections for the month of May, according to Hegar's office:

  • Motor vehicle sales and rental taxes — $265 million, down 38 percent from May 2019 and a modest improvement over April’s results
  • Motor fuel taxes — $221 million, down 30 percent from May 2019 and the steepest drop since 1989
  • Natural gas production tax — $31 million, down 76 percent from May 2019
  • Oil production tax — $90 million, the lowest monthly amount since July 2010, down 75 percent from May 2019 and the steepest drop since a 77 percent drop in March 1988
  • Hotel occupancy tax — $8 million, down 86 percent from May 2019 and the steepest drop on record in data going back to 1982
  • Alcoholic beverage taxes — $28 million, down 76 percent from May 2019 and the steepest drop on record in data going back to 1980
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