For the first time in months, Texas’ sales tax revenue increased when compared with the same period last year despite the ongoing coronavirus pandemic, Comptroller Glenn Hegar said Monday.
Texas collected $2.98 billion in sales tax revenue in July — 4.3% more than in July 2019. That revenue, which mainly reflects purchases made in June, was “better than expected, despite the high unemployment due to the pandemic,” Hegar said in a statement.
“The increase was due to a surge in collections from the retail trade sector,” he said, noting that collections from e-commerce “were up sharply” as consumers shopped online. More online marketplace and remote retailers, Hegar said, were required to collect and remit Texas taxes on their sales thanks to a 2018 U.S. Supreme Court decision allowing states to collect sales tax from online retailers that don’t have a physical presence inside their boundaries and two Texas laws that went into effect in October.
Meanwhile, he said, receipts from other major sectors in the state, such as construction, services and restaurants, “showed significant declines.”
Monday’s news follows months of fallout related to the pandemic, which began spreading across Texas in March. After the governor ordered much of the state to shut down in an attempt to curb the spread of the virus, Hegar announced in May that the state had seen its steepest decline in over a decade with April sales tax collections. The next month, Hegar said the bleak trend had continued. As collections dropped, the state’s unemployment rate skyrocketed — a record-high 13.5% rate was reported in April.
But Hegar warned that the positive news from July collections could turn dour again in the coming months after certain federal unemployment benefits related to the pandemic expired at the end of July.
“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,” he said.
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