Sales Tax

A Sales Tax is a ad valorem tax on eligible sales transactions.

• Example(s):
  • a Consumer Excise Tax.
  • a Value-Added Tax.
  • …
• Counter-Example(s):
  • a Use Tax.
  • an Income Tax.
  • a Capital Tax.
  • a Property Tax.
• See: Point of Purchase, Tax-Inclusive, Consumption Tax, Tax Revenue.

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References

2016

• (Wikipedia, 2016) ⇒ http://wikipedia.org/wiki/sales_tax Retrieved:2016-3-21.
  • A sales tax is a tax paid to a governing body for the sales of certain goods and services. Usually laws allow (or require) the seller to collect funds for the tax from the consumer at the point of purchase. When a tax on goods or services is paid to a governing body directly by a consumer, it is usually called a use tax. Often laws provide for the exemption of certain goods or services from sales and use tax.

• (Wikipedia, 2016) ⇒ http://wikipedia.org/wiki/ad_valorem_tax#Sales_tax Retrieved:2016-3-21.
  • A sales tax is a consumption tax charged at the point of purchase for certain goods and services. The tax is usually set as a percentage by the government charging the tax. There is usually a list of exemptions. The tax can be included in the price (tax-inclusive) or added at the point of sale (tax-exclusive).

    Ideally, a sales tax is fair, has a high compliance rate, is difficult to avoid, is charged every time an item is sold retail, and is simple to calculate and simple to collect.A conventional or retail sales tax attempts to achieve this by charging the tax only on the final end user, unlike a gross receipts tax levied on the intermediate business who purchases materials for production or ordinary operating expenses prior to delivering a service or product to the marketplace. This prevents so-called tax "cascading" or "pyramiding," in which an item is taxed more than once as it makes its way from production to final retail sale. There are several types of sales taxes: seller or vendor taxes, consumer excise taxes, retail transaction taxes, or value-added taxes.

• (Wikipedia, 2016) ⇒ http://wikipedia.org/wiki/sales_tax#Types Retrieved:2016-3-21.
  • Conventional or retail sales tax is levied on the sale of a good to its final end user and is charged every time that item is sold retail. Sales to businesses that later resell the goods are not charged the tax. A purchaser not an end user is usually issued a “resale certificate” by the taxing authority and required to provide the certificate (or its ID number) to a seller at the point of purchase, along with a statement that the item is for resale. The tax is otherwise charged on each item sold to purchasers without such a certificate and who are under the jurisdiction of the taxing authority. Other types of sales taxes, or similar taxes, include the following: *Manufacturers' sales tax, a tax on sales of tangible personal property by manufacturers and producers. *Wholesale sales tax, a tax on sales of wholesale of tangible personal property when in a form packaged and labeled ready for shipment or delivery to final users and consumers. *Retail sales tax, a tax on sales of retail of tangible personal property to final consumers and industrial users.
    • Gross receipts taxes, levied on all sales of a business. They have been criticized for their "cascading" or "pyramiding" effect, in which an item is taxed more than once as it makes its way from production to final retail sale.
    • Excise taxes, applied to a narrow range of products, such as gasoline or alcohol, usually imposed on the producer or wholesaler rather than on the retail seller. *Use tax, imposed directly on the consumer of goods purchased without sales tax, generally items purchased from a vendor not under the jurisdiction of the taxing authority such as a vendor in another state). Use taxes are commonly imposed by states with a sales tax but are usually enforced only for large items such as automobiles and boats. *Securities turnover excise tax, a tax on the trade of securities. *Value added tax, in which tax is charged on all sales, thus avoiding the need for a system of resale certificates. Tax cascading is avoided by applying the tax only to the difference ("value added") between the price paid by the first purchaser and the price paid by each subsequent purchaser of the same item. *FairTax, a proposed federal sales tax, intended to replace the US federal income tax. *Turnover tax, similar to a sales tax, but applied to intermediate and possibly capital goods as an indirect tax. Most countries in the world have sales taxes or value-added taxes at all or several of the national, state, county, or city government levels. Countries in Western Europe, especially in Scandinavia, have some of the world's highest valued-added taxes. Norway, Denmark and Sweden have higher VATs at 25%, Hungary has the highest at 27% although reduced rates are used in some cases, as for groceries, art, books and newspapers. In some jurisdictions of the United States, there are multiple levels of government which each impose a sales tax. For example, sales tax in Chicago (Cook County), IL is 10.25%, consisting of 6.25% state, 1.25% city, 1.75% county and 1% regional transportation authority. Chicago also has the Metropolitan Pier and Exposition Authority tax on food and beverage of 1% (which means eating out is taxed at 11.25%). For Baton Rouge, Louisiana, the tax is 9%, consisting of 4% state and 5% local rate. In L.A. it is also 9%, which is 7.5% state and 1.5% county rate. In California, sales taxes are made up of various state, county and city taxes. The state tax is "imposed upon all retailers" for the "privilege of selling tangible personal property at retail." Strictly speaking, only the retailer is responsible for the payment of the tax; when a retailer adds this tax to the purchase price, the consumer is merely reimbursing the retailer by contractual agreement. When consumers purchase goods from out-of-state (in which case the seller owes no tax to California) the consumer is required to pay a "use tax" identical to the sales tax. Use tax is levied upon the "storage, use, or other consumption in this state of tangible personal property." Consumers are responsible for declaring these purchases in the same filing as their annual state income tax, but it is rare for them to do so. An exception is out-of-state purchase of automobiles. Then, use tax is collected by the state as part of registering the vehicle in California. The trend has been for conventional sales taxes to be replaced by more broadly based value-added taxes. Value -added taxes provide an estimated 20% of worldwide tax revenue and have been adopted by more than 140 countries. The United States is now one of the few countries to retain conventional sales taxes.

2003

• http://www.encyclopedia.com/doc/1G2-3401803696.html
  • QUOTE: SALES TAXES consist of two types: excise and general sales. The excise tax is placed on specified commodities and may be at specific rates or on an ad valorem basis. The general sales tax may be a manufacturers' excise tax, a retail sales tax paid by consumers, a "gross income" tax applied to sales of goods and provision of services, or a "gross sales" tax applied to all sales of manufacturers and merchants. ...

    ... A corollary of the sales tax is the use tax. This is a charge levied on taxable items bought in a state other than the state of residence of the purchaser for the privilege of using the item in the state of residence. The rate structure is the same as that of the sales tax. Automotive vehicles are the most significant item in the yield of use taxes.

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