The Facts
  • Consumption taxes or sales taxes are generally simple, transparent, and levied only on the end-user.
  • Since the sales tax only affects personal consumption, income, investment, and job creation are not penalized.
  • At the state level, Texas levies a 6.25% sales tax rate on consumers, slightly above the national median of 6%.
  • In addition, local governments are also allowed to add a 2% levy to the sales tax rate for a maximum combined rate of 8.25%.
  • Texas’ heavy reliance on consumption taxes is an attractive feature of its tax system for businesses and entrepreneurs.
  • As of August 2012, the Texas economy had helped produce 28 consecutive months of increased state sales tax revenues, according to the Texas Comptroller of Public Accounts.
  • State and local governments should continue to rely on consumption taxes as their main revenue generators.
  • Any increase in the sales tax base or the sales tax rate should be accompanied by reductions in other taxes.