California saw a 4.7% increase in sales and use tax revenue in the fourth quarter of 2022 compared to the same period in 2021.

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BREA, Calif. (April 13, 2023) — The Golden State showed moderate gains in sales tax receipts in the fourth quarter of 2022, reporting an overall 4.7% increase in sales and use tax revenue from October through December, compared to the same period in 2021. The returns reflect holiday season shopping activity which lifted revenue to local agencies across the state.   

“Overall, general consumer goods grew by a meager 1.8% in large part due to merchants selling gas at prices which remained elevated over the last year,” stated Andy Nickerson, President/CEO of HdL Companies, the leading provider of revenue enhancement technology and consulting services for local governments. “Otherwise, many brick and mortar retailers experienced mixed results as the phenomenal prior year activity made for an extremely difficult comparison.” 

High gas prices continued to burden commuters and seasonal travelers throughout the state, lifting fuel-service stations’ sales tax receipts 10% higher than a year ago. Gas prices of more than $5 per gallon did not detract consumers from spending at local restaurants and hotels.  

“Restaurant and hotels experienced an 8.7% increase, enhanced by higher menu prices and return-to-office workplaces,” noted Nickerson. “Although car inventory shortages had a negative impact on unit sales and leasing activity throughout 2022, year-end sales by new car dealers, notably high-end luxury and electric/hybrid brands, helped to boost the auto-transportation sector by 5.6%.” 

The building and construction sector was up 5.4%. Contractors accounted for most of the growth in the sector, which continues to experience steady housing demand and pent-up construction projects delayed by supply chain interruptions. With rising interest rates tempering sales activity, property owners maintained home improvement spending.

Overall, calendar year 2022 exhibited at 9.5% surge in tax receipts compared to 2021. Inflation was a key factor and drove up prices on everything from daily purchases to vehicles. Another key factor was all-time peaks in global crude oil prices, which caused fuel prices to skyrocket.  

“Heading into 2023, HdL sees modest changes coming from California’s taxable sales due to additional interest rate hikes and consumer sentiment waning about the economy,” concluded Nickerson.  

 
Statewide - All Data 4Q 2022 4Q 2021 % Change
Autos & Transportation 361,636,963 342,329,225  5.6%
Building & Construction 183,818,414  174,297,188  5.5%
Business & Industry 409,822,968  381,609,396  7.4%
Food & Drugs 114,499,598  111,176,870  3.0%
Fuel & Service Stations 203,789,135  184,949,736  10.2%
General Consumer Goods 451,056,582    442,751,572 1.9%
Restaurants & Hotels 282,326,115  259,816,332  8.7%
County & State Pools 448,086,429  446,658,574  0.3%
Transfers & Unidentified 3,626,666  5,060,868  -28.3%
TOTAL 2,458,662,869  2,348,649,761  4.7%

 

View a complete table of sector and regional data.

 

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