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The Greater Houston Partnership has issued the following press release:
Sales and use tax collections for the 12 most populous Houston-area cities[1] totaled $1.1 billion in the 12 months ending September ’21, up 10% from $972.6 million for the same period a year ago. This rise in collections is the largest 12-month increase since August ’18. Collections for the month of September totaled $102.7 million, up 14.6% from $89.6 million in September ’20. September sales tax collections statewide continued to exceed pre-pandemic collections, since last year’s collections were suppressed by the pandemic, according to the Texas Comptroller’s Office of Public Accounts. “State sales tax collections again strongly surpassed pre-pandemic levels, reaching a new monthly high,” said Texas Comptroller Glenn Hegar in a press release.
Collections for the City of Houston rose 14.8% from September ’20 to September ’21. Ten of the cities recorded double-digit gains in sales tax collections since September ’20. La Porte had a single-digit gain of 1.5% during this period, and Texas City recorded a decrease of 0.6%.
Sales tax collections mirror trends in the overall Houston economy. During the fracking boom, collections grew at double-digit rates. Growth peaked at 11.1% in October ’12, then trended down. During the fracking bust of ’15 and ’16, collections fell below the levels of ’13 and ’14. By March ’17, collections were 4.2% below their previous peak. As the region recovered in ’17, collections grew again as Houstonians rebuilt their homes and replaced goods damaged by Hurricane Harvey. Economic growth slowed again in ’18, which also slowed tax collections. The regional economy showed signs of improvement in early ’20, which ended once the pandemic caused business closures. Pent-up demand and savings accumulated throughout the pandemic led to increased spending in ’21 and, consequently, higher tax collections.
About the Sales and Use Tax
Texas levies a 6.25% state sales and use tax on all retail sales, leases and rentals of most goods, as well as taxable services. Local taxing jurisdictions may also impose up to 2% sales and use tax for a maximum overall rate of 8.25%. The City of Houston has a 1% rate, and the Metropolitan Transit Authority of Harris County has a 1% rate, leading to an overall rate of 8.25% for the city. Cities with less than a 2% rate, like Houston, may have additional sales and use tax rates that may be related to transit, crime control, emergency services and more. For the sales and use tax rates for the most populous 12 cities in the Houston region, visit https://www.houston.org/houston-data/sales-and-use-tax-rates.
The Texas Comptroller releases allocated payments from the sales and use tax monthly. There is a two-month delay between when the tax is collected and when it is allocated. September sales data will be available in November.
[1] The 12 most populous cities in the region are Houston, Pasadena, Pearland, League City, Sugar Land, Conroe, Baytown, Missouri City, Galveston, Texas City, Friendswood and La Porte. As a group, they represent 80% of all sales tax collections in the region. The other 102 smaller cities account for the remaining 20%.
Prepared by Greater Houston Partnership Research Division