(Central Square) — The state’s December sales tax revenue was $3.93 billion, up 10.5% from December 2021, Texas Comptroller Glenn Hegar said.
As the rate of consumer price inflation increased by 7.7% in the last three months ending December 2022, total sales tax receipts in Texas increased by 11.2% compared to the same period in 2021.
Hegar’s announcement came after Texas experienced the largest GDP growth of any US state in the third quarter of last year, at 8.2%, well above the national average, according to the US Bureau of Economic Analysis.
No other state came close. Oklahoma recorded the second highest GDP growth rate of 5.5%, followed by Wyoming 5.3% and North Dakota 5.2%. By comparison, the largest US state, California, reported a third-quarter GDP growth rate of 3.8%. The national GDP growth rate was 3.2%.
“Selling expenses continued to be the main driver of sales tax revenue growth, with non-retail sector revenues growing rapidly,” Hegar said. “The mining, construction, wholesale, rental and leasing sectors posted double-digit growth year-over-year, and earnings from the manufacturing sector also remain strong.”
Texas received the largest revenue of $566 million from taxes on car sales and rentals, up 7% from December 2021. The second largest revenue generated was $516 million in oil taxes, up 15% from December 2021. natural gas production tax decreased by 3% compared to December 2021.
Rounding out the top 5 revenue streams are $317 million in motor fuel taxes, up 2% from December 2021; $137 million in taxes on alcoholic beverages, up 10% from December 2021; and $58 million in hotel tax, up 44% from December 2021.
While revenue growth from the services sector reached double digits, revenues from the restaurant and retail sectors were roughly in line with inflation. The largest growth among retail segments was observed in food and beverage stores, followed by online stores. Receipts from general trade stores and furniture and home goods stores remained flat; revenue from electronics and home appliances stores, as well as sporting goods and hobby stores decreased compared to last year.
Sales tax receipts for December are based on November sales for which taxes were paid in the previous month. Sales tax is the largest source of government funding for the state budget, accounting for 56% of all tax revenue.