Texas sales taxes soared 10.4% in September

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DALLAS – Texas recorded a 10.4% year-over-year increase in sales tax revenue in September, representing sales for August, according to state Comptroller Glenn Hegar.

Hurricane Harvey came ashore between Houston and Corpus Christi Aug. 25, but the impact of the event is not expected to show up in sales-tax revenue until next month.

In the wake of the storm, the Comptroller’s office suspended sales tax collections for recovery-related efforts, along with hotel, and motor vehicle sales taxes in the affected region. The category 4 hurricane also halted operations at offshore oil and gas rigs, which could affect production tax revenue.

The latest report represents taxes on sales in August and tabulated in September.

The 10.4% increase over the same month last year to $2.36 billion is the largest percentage increase of the calendar year, just ahead of June’s 10.3% increase. September is the first month of Texas’ fiscal year.

“The double-digit growth in sales tax revenue was due to increased spending in the oil- and natural gas-related sectors,” Hegar said. “But moderate growth was evident in sectors fueled primarily by consumer spending, including retail trade and telecommunications services.”

Total sales tax revenue for the three months ending in September 2017 is up 5.5% compared to the same period a year ago.

Since Texas does not have an income tax, sales tax revenue is the largest source of state funding, accounting for 58% of all tax collections. Motor vehicle sales and rental taxes, motor fuel taxes and oil and natural gas production taxes also are large revenue sources for the state.

The latest report showed motor vehicle sales and rental taxes down 2.6% to $385.5 million. Motor fuel taxes were down 0.1% to $293.8 million. Oil and natural gas production taxes soared 35.8% to $293.2 million.

Consumers in counties declared part of the disaster zone can claim an exemption from sales tax on charges for labor to repair or restore items damaged by a declared natural disaster, including furniture and other items of tangible personal property, according to the Comptroller’s office. The exemption can also be claimed on costs to launder or dry clean damaged clothing or other items.

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