Report: With boost in e-commerce, Texas sales tax receipts increased 4.3% in July

Strong retail sales led Texas to the first year-over-year increase in the state's monthly sales tax collections since the pandemic began.

Total sales tax revenue in July was $2.98 billion, a 4.3% increase over July 2019, according to an Aug. 3 report from Texas Comptroller Glenn Hegar. The figure reflects sales in June.

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

The comptroller cited sharp increases in e-commerce transactions and higher spending on home improvement and sporting goods for the strong showing, buoyed by government aid.

“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. With the expiration of these benefits at the end of July, consumer spending and sales tax collections may decline in coming months," Hegar said.

Despite the boost, sales tax, the largest source of revenue for the state, is down 5.3% for the past three months as compared to this period last year. The comptroller's office is projecting a year-end deficit of $4.6 billion.