Monthly update: Sales tax November '21

The Greater Houston Partnership has issued the following press release:

Sales and Use Tax Collections

Sales and use tax collections for the 12 most populous Houston-area cities (See footnote) totaled $1.1 billion in the 12 months ending November ’21, up 14.7 percent from $962.6 million for the same period a year ago. This rise in collections is the largest 12-month increase since February ’07. 

Collections for the month of November totaled $98.0 million, up 26.8 percent from $77.3 million in November ’20. November sales tax collections statewide continued to exceed pre-COVID 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 continued the exceptional growth of recent months, reaching another new monthly high with receipts from all major economic sectors surging above year-ago levels,” said Texas Comptroller Glenn Hegar in a recent press release. “Propelled by vigorous business and consumer spending, receipts from most major sectors were well above pre-pandemic levels.”

Collections for the City of Houston rose 28.1 percent from November ’20 to November ’21. All but one of the cities recorded double-digit gains in sales tax collections since November ’20. La Porte recorded a decrease of 8.7 percent.

“With Christmas shopping jumpstarted by the early start of holiday promotional pricing weeks ahead of Black Friday,” said Hegar, “and despite supply chain clogs and household budgets pressured by rising prices for food and gasoline, consumer spending drove double-digit increases in receipts from retail trade.”

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 percent 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 percent 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 percent 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 2.0 percent sales and use tax for a maximum overall rate of 8.25 percent. The City of Houston has a 1.0 percent rate, and the Metropolitan Transit Authority of Harris County has a 1.0 percent rate, leading to an overall rate of 8.25 percent for the city. Cities with less than a 2.0 percent 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. December sales data will be available in February. 

[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 80.0 percent of all sales tax collections in the region. The other 102 smaller cities account for the remaining 20 percent.