Final answer:
Texas relies primarily on sales tax at the state level and property tax at the local level for revenue. The state does not collect income taxes and thus places greater emphasis on sales tax collection, while local governments leverage property taxes to fund their activities.
Step-by-step explanation:
At the state level, Texas does not implement a state income tax unlike most other states. Instead, Texas relies heavily on sales taxes as the primary source for state revenues, accounting for about 47 percent of total tax revenue. Sales tax is collected from consumer activities involving the purchase of goods such as food, clothing, and tobacco products, among others.
On the local level, the most significant revenue source is the property tax, which contributes to approximately 72 percent of local government tax revenue. This levy on residential and commercial real estate is directly tied to property values, with higher value properties incurring more tax. Both state and local governments also benefit from intergovernmental revenues, receiving federal funds allocated for specific purposes such as welfare, healthcare, and education.
Collectively, these taxes and revenue sources, along with service charges and fees, enable Texas state and local governments to fund various programs, particularly those related to health care and education, which constitute substantial portions of the governmental spending.