Texas sales tax revenue up in July; ‘We’re not out of the woods yet, but we’re optimistic’

By Sarah Downey

After months of staying home, Texas consumers went back to stores earlier this summer, helping bring in nearly $3 billion in state sales tax collections in July, a 4.3 percent increase over the same month last year.

“We’re seeing resilience and grit in Texas businesses as they reopen or find new ways to serve their customer base,” Aaron Cox, chief operating officer at the Texas Association of Business (TAB), told The Center Square. “We’re not out of the woods yet, but we’re optimistic that Texans – businesses and consumers – will come out of this pandemic stronger together.”

Texas Comptroller Glenn Hegar said that his office will send cities, counties, transit and other taxing districts more than $908 million. The money comes from local sales tax allocations for August, and is up 3.6 percent compared to last August. The allocations are from June sales by businesses reporting sales tax monthly, and April, May and June sales by quarterly filers.

Texas’ social distancing requirements were more relaxed in June than in previous months, and many people were still receiving an extra $600 a week in unemployment benefits.

"State sales tax collections in July were better than expected, increasing despite the high unemployment due to the pandemic," Hegar said in a news release. "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.”

Sales tax revenue, which represents the largest amount of state funding for the Texas budget, provides 57 percent of all tax collections.

There is no one-size-fits-all solution to weathering the pandemic, Cox said, adding that TAB has issued a Return to Work Initiative, a resource guide for employers and workers.

“Texas employers and employees are hurting during this crisis, without a doubt,” Cox said. “But Texas business and our workforce are strong and resilient, ready to lead the way to recovery. We’ve seen our members adapt their workplaces, office and retail operations. Their grit and perseverance is helping to keep Texas open for business.”

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