The Tax Foundation continues its series on state and local tax collections with sales tax collections. While most states (except for Delaware, Montana, New Hampshire, and Oregon) levy a sales tax, there is wide variance in how the sales tax is applied. A statewide sales tax is the most common; however, there are some states that only levy sales taxes at the local level. There is also a varying degree of exemptions throughout the states on certain types of goods such as groceries.

In Oklahoma, sales taxes make up a much larger share of total tax collections than property taxes. According to the data, Oklahoma relies on sales taxes for 33% of its total state and local tax collections, ranking us 12^th nationally. As shown in the chart below, this is similar to most other states in the region. Arkansas leads the region with 37% of total tax collections coming from sales taxes while Missouri brings in less than 27%.

Just as neighboring businesses compete with each other, so do states. A state with a low sales tax rate applies pressure to surrounding states to not increase their rate to an uncompetitive level. However, even some states with lower sales tax rates can bring in a similar amount of revenue relative to their total tax collections if they have a broader tax base. Allowing multiple exemptions to different industries narrows the tax base and requires a higher tax rate to make up for the lost revenue. This can create distortions in the market and provide an industry an unfair advantage. A sales tax with a low rate and broad base allows for the most freedom in the market while creating a stable revenue base for state government.