(The Center Square) – State sales tax revenue was $3.93 billion in December, a 10.5% increase from December 2021, Texas Comptroller Glenn Hegar said.
As the rate of consumer price inflation increased by 7.7% for the last three months ending in December 2022, total sales tax revenue in Texas increased by 11.2% compared to the same period in 2021.
Hegar’s announcement came after Texas saw the largest GDP growth of any state in the U.S. of 8.2% in the third quarter of last year, well above the national average, according to U.S. Bureau of Economic Analysis data.
No other state came close. Oklahoma recorded the second-highest GDP growth rate of 5.5%, followed by Wyoming’s 5.3% and North Dakota’s 5.2%. By comparison, the largest state in the U.S., California, reported a third-quarter GDP growth rate of 3.8%. The national GDP growth rate was 3.2%.
“Business spending continued to be the principal driver of growth in sales tax revenue, with rapid growth in receipts from non-retail sectors,” Hegar said. “The mining, construction, wholesale trade, and rental and leasing sectors had double-digit gains compared with a year ago, and receipts from the manufacturing sector remain robust as well.”
Texas collected the most revenue of $566 million from motor vehicle sales and rental taxes, up 7% from December 2021. The second-highest revenue received was $516 million in oil production taxes, up 15% from December 2021. The third highest was $371 million from natural gas production tax, down 3% from December 2021.
Rounding out the top five generators of revenue was $317 million in motor fuel taxes, up 2% from December 2021; $137 million in alcoholic beverage taxes, up 10% from December 2021; and $58 million in hotel occupancy tax, up 44% from December 2021.
While growth in receipts from the services sector reached double digits, those from restaurants and the trade sectors were about the rate of inflation. The fastest growth among retail segments was from food and beverage stores, followed by online general merchandisers. Receipts from store-based general merchandisers and furniture and home furnishings stores remained flat; receipts from electronics and appliance stores, and sporting goods and hobby stores, declined from last year.
The sales tax revenue for December is based on November sales, for which taxes were remitted last month. Sales tax is the largest source of state funding for the state budget, accounting for 56% of all tax collections.