Answer to Question #233779 in Financial Math for Jesiel Alfanta

Question

A major source of revenue in Texas is a state sales tax on certain types of goods and services. Data are compiled and the state comptroller uses them to project future revenues for the state budget. One particular category of goods is classified as Retail Trade. Four years of quarterly data (in $millions) for one particular area of southeast Texas follow:

Answer 1

Texas imposes a 6.25 percent state sales and use tax on all retail sales, leases and rentals of most goods, as well as taxable services.

Such products as flour, sugar, bread, milk, eggs, fruits, vegetables and similar groceries (food products) are not subject to Texas sales and use tax. Tax is due, however, on non-food items such as paper, pet, beauty and hygiene products; clothing; books; and certain edible items.