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Sales Tax:

A sales tax is a consumption tax charged at the point of purchase for certain goods and services. The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale. A portion of the sale may be exempt from the calculation of tax, because sales tax laws usually contain a list of exemptions. Laws governing the tax may require it to be included in the price (tax-inclusive) or added to the price at the point of sale.

Most sales taxes are collected from the buyer by the seller, who remits the tax to a government agency. Sales taxes are commonly charged on sales of goods, but many sales taxes are also charged on sales of services. Ideally, a sales tax would have a high compliance rate, be difficult to avoid, and be simple to calculate and collect.




She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Sat Dec 18th, 2010 at 01:19:13 PM EST
[ Parent ]
I note the neat thing is, a Tobin Tax can be automatically "included" since the exchange of one currency for another can be viewed as a "purchase" of that currency.

;-)


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sat Dec 18th, 2010 at 01:23:23 PM EST
[ Parent ]
And this differs from a VAT how?

- Jake

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by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Dec 18th, 2010 at 01:58:01 PM EST
[ Parent ]
VAT:

A value added tax (VAT) is a form of consumption tax. It is a tax on the "value added" to a product or material, from an accounting view, at each stage of its manufacture or distribution.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Sat Dec 18th, 2010 at 02:02:56 PM EST
[ Parent ]
(Hit post instead of preview.)

I don't like either one.  They are both regressive.  The biggest advantage to a sales tax is it is a lot easier to organize, manage, and run.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sat Dec 18th, 2010 at 02:10:22 PM EST
[ Parent ]
But if VAT is already organized, then the value of changing would go down?

Wikipedia has an easy comparision:

Value added tax - Wikipedia, the free encyclopedia

A value added tax (VAT) is a form of consumption tax. It is a tax on the "value added" to a product or material, from an accounting view, at each stage of its manufacture or distribution. The "value added" to a product by a business is the sale price charged to its customer, minus the cost of materials and other taxable inputs. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. With the VAT, collections, remittances to the government, and credits for taxes already paid occur each time a business in the supply chain purchases products from another business. The reason businesses end up paying no tax is that at the time they sell the product, they receive a credit for all the tax they have paid to suppliers.

It appears that sales taxes are easier in that they apply to fewer transactions, while VAT is easier in that they always apply (and thus discourages fraud).

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by A swedish kind of death on Sat Dec 18th, 2010 at 02:34:26 PM EST
[ Parent ]
VAT seems to be used more as an excuse to enforce business record keeping than as a tax.

More generously, it can also help with cash flow because every quarter businesses get a short-term loan of x% of their quarterly turnover.

If the aim was revenue collection from consumers, the pay-back/pay-forward system would be unnecessary. And because cross-border pay-back/pay-forward gets complicated, VAT isn't even collected for B2B transactions in the EU.

E.g. I sold a domain name to a Dutch company at the start of the year, and although VAT was nominally charged and recovered, in practice there was one line of paperwork and no actual cash.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Dec 18th, 2010 at 04:05:13 PM EST
[ Parent ]

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