State Sales Tax Revenue Totaled $2.6 Billion In March

(AUSTIN) — Texas Comptroller Glenn Hegar today said state sales tax revenue totaled $2.63 billion in March, 2.4 percent less than in March 2020. This amount, however, includes some revenue remitted in March that, in normal circumstances, would have been received by the state in February.

The majority of March sales tax revenue is based on sales made in February and remitted to the agency in March. However, this year, the Feb. 22 due date for state taxes and fees to be reported and paid was extended by one week to Mar. 1 due to the winter storm’s effects. After adjusting the March totals to account for Mar. 1 activity, March sales tax revenue totaled $2.46 billion, down 8.6 percent from March 2020.

“Adjusted for the effects of delayed payments due to the late February winter weather disaster, March state sales tax collections continued to slump below levels of a year ago,” Hegar said. “Collections from all significant sectors other than retail trade and restaurants continued to decline, led by depressed receipts from oil- and gas-related businesses.

“Some of the trends established during the COVID-19 pandemic continued, as remittances from online retailers, building materials stores, and sporting goods stores continued to show strong growth over the previous year. Clothing and accessories stores and furniture stores showed declines, likely due to store closures caused by widespread power outages.

“Tax receipts from restaurants were up over the previous year’s levels for the first time since onset of the pandemic, but the increase reflects the first month affected by the pandemic, as restaurant activity began to slow in the latter half of February 2020.”

Total sales tax revenue for the three months ending in March 2021 was down 5.3 percent compared to the same period a year ago. Sales tax is the largest state funding source for the state budget, accounting for 59 percent of all tax collections. While the effects of the COVID-19 pandemic continued to depress some revenue sources, others are now exhibiting year-over-year gains compared to a year ago when the pandemic results had started to take hold.

Texas collected the following revenue from other significant taxes, some of which also were affected by the extension of the Feb. 22 deadline:

• motor vehicle sales and rental taxes — $467 million, up 20.2 percent from March 2020, but accounting for Mar. 1 activity, total collections were $466 million, up 19.9 percent from March 2020;
• motor fuel taxes — $232 million, down 20.8 percent from March 2020, due to reduced driving during the winter storm in February;
• oil production tax — $237 million, down 22.4 percent from March 2020;
• natural gas production tax — $139 million, up 36.6 percent from March 2020, but accounting for Mar. 1 activity, total collections were $138 million, up 34 percent from March 2020;
• hotel occupancy tax — $32 million, down 29.1 percent from March 2020, but after accounting for Mar. 1 activity, total collections were $30 million, down 34.9 percent from March 2020; and
• Alcoholic beverage taxes — $97 million, up 12.4 percent from March 2020, but after accounting for Mar. 1 activity, total collections were $83 million, down 3.1 percent from March 2020.

For details on all monthly collections, visit the Comptroller’s Monthly State Revenue Watch. For an extensive history of tax policy developments and fees since 1972, visit our updated Sources of Revenue publication.