Sales tax

A sales tax is a consumption tax charged at the point of purchase for certain goods and services. Public finance is a field of economics concerned with paying for collective or governmental activities and with the administration and design of those activities The field of finance refers to the concepts of Time, Money and Risk and how they are interrelated Payroll tax generally refers to two kinds of taxes: Taxes which Employers are required to withhold from Employees Pay, also known as Withholding A capital gains tax (abbreviated CGT) is a Tax charged on Capital gains the profit realized on the sale of a non-inventory Asset that was purchased Stamp duty is a form of Tax that is levied on documents Historically a physical stamp (a Tax stamp) had to be attached to or impressed upon the document to denote Land value taxation (LVT (or site value taxation) is an Ad valorem tax where only the value of land itself is taxed Value added tax ( VAT) or goods and services tax ( GST) is a consumption Tax levied on value added. A flat tax (short for flat rate tax is a Tax system with a constant tax rate The tax tariff and trade laws of a political region State or Trade bloc determine which forms of consumption and production tend to be encouraged A tax haven is a place where certain Taxes are levied at a low rate or not at all In Economics, tax incidence is the analysis of the effect of a particular Tax on the distribution of economic welfare. In a Tax system and in Economics, the tax rate describes the burden Ratio (usually expressed as a Percentage) at which a business or person is A proportional tax is a Tax imposed so that the Tax rate is fixed as the amount subject to taxation increases A progressive tax is a Tax imposed so that the Tax rate increases as the amount subject to taxation increases A regressive tax is a Tax imposed in such a manner that the Tax rate decreases as the amount subject to taxation increases Tax advantage refers to the economic bonus which applies to certain accounts or Investments that are by Statute, tax-reduced tax-deferred or tax-free Personal income taxes See also Income tax in Australia Only the federal government imposes income taxes on individuals and this is the most significant source of Taxation in the British Virgin Islands is relatively simple by comparative standards photocopies of all of the tax laws of the British Virgin Islands would together amount to about 200 The level of Taxation in Canada is average among Organisation for Economic Co-operation and Development (OECD countries Taxes provide the most important revenue source for the Government of the People's Republic of China. See Government of Colombia for a wider perspective of Colombian government See Government of France for a wider perspective of French government Taxes in Germany —being a Federal Republic —are levied by the federation ( Bund) the States ( Länder) as well as the HK Inland Revenue Ordinance Cap112 is one of Hong Kong's Ordinances Taxes in India are levied by the Central Government and the State Governments This article ls with Taxation in Indonesia or pajak. Definitions "Pajak" in Indonesian for Tax and taxes whereas " Perpajakan The system of Taxation in Ireland is broadly similar to the system of Taxation in the United Kingdom. The Netherlands has a rich history dealing with taxation predating the Romanic period. Taxation in New Zealand is collected at a national level by the Inland Revenue Department (IRD on behalf of the Government of New Zealand. The Income tax in Peru is collected by the Superintendencia Nacional de Administración Tributaria, best known as SUNAT. The Russian Tax Code is the primary tax law for the Russian Federation. Individual income tax in Singapore forms part of two main sources of Income tax, the other being Corporate taxes on companies In Tanzania the Income Tax Act 2004 came into effect in July 2004 Taxation in the United Kingdom may involve payments to a minimum of two different levels of government The central government ( Her Majesty's Revenue and Customs) Taxation in the United States is a complex system which may involve payment to at least four different levels of government and many methods of taxation Value added tax ( VAT) or goods and services tax ( GST) is a consumption Tax levied on value added. Comparison of Tax Rates around the world is a difficult and somewhat subjective enterprise This table lists countries by total 2005 Tax revenues (federal state and local as a percentage of GDP (Gross Domestic Product Economic policy refers to the actions that Governments take in the economic field. Monetary policy is the process by which the Government, Central bank, or monetary authority of a country controls (i the Supply of Money, A central bank, reserve bank, or monetary authority is the entity responsible for the Monetary policy of a country or of a group of member states In Economics, money supply, or money stock, is the total amount of money available in an Economy at a particular point in time The gold standard is a monetary system in which a region's common media of exchange are paper notes that are normally freely convertible into pre-set fixed quantities of Gold Fiscal policy, taking the scope of Budgetary policy, refers to government policy that attempts to influence the direction of the economy through changes in government taxes Government spending or government expenditure is classified by economists into three main types A budget deficit occurs when an Entity (often a Government) spends more Money than it takes in Government debt (also known as public debt or national debt) is Money (or credit) owed by any level of government either Central government Trade is the willing exchange of goods, services, or both Trade is also called Commerce. For other uses of this word see Tariff (disambiguation. A tariff is a tax imposed on goods when they are moved across a political boundary A trade pact is a wide ranging Tax tariff and trade pact that often includes Investment guarantees The field of finance refers to the concepts of Time, Money and Risk and how they are interrelated In Economics, a financial market is a mechanism that allows people to easily buy and sell ( Trade) financial Securities (such as stocks and bonds There are two basic financial market participant categories Investor vs Corporate finance is an area of Finance dealing with the financial decisions Corporations make and the tools and analysis used to make these decisions Personal finance is the application of the principles of Finance to the monetary decisions of an individual or family unit Public finance is a field of economics concerned with paying for collective or governmental activities and with the administration and design of those activities Financial regulations are a form of Regulation or supervision which subjects Financial institutions to certain requirements restrictions and guidelines aiming to A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money Fractional-reserve banking is the banking practice in which Banks keep only a fraction of the value of their Bank notes and demand deposits in reserve Full-reserve banking is the Banking practice in which the full amount of each depositor's funds are available in reserve at the bank when each depositor Free banking is a theory of Banking in which commercial banks and market forces control the provision of banking services Islamic banking refers to a system of banking or banking activity that is consistent with Islamic law ( Sharia) principles and guided by Islamic economics A consumption tax is a Tax on the income or expenditure for goods and services Point of sale or point of service ( POS or PoS) can mean a retail shop, a checkout counter in a shop or the location where a transaction The tax is usually set as a percentage by the government charging the tax. In Mathematics, a percentage is a way of expressing a number as a Fraction of 100 ( per cent meaning "per hundred" 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). In a Tax system and in Economics, the tax rate describes the burden Ratio (usually expressed as a Percentage) at which a business or person is In a Tax system and in Economics, the tax rate describes the burden Ratio (usually expressed as a Percentage) at which a business or person is

Ideally, a sales tax is fair, has a high compliance rate, is difficult to avoid, is charged exactly once on any one item, 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. A gross receipts tax, sometimes referred to as a gross excise tax, is a Tax on the total gross revenues of a company regardless of their source A business (also called firm or an enterprise) is a legally recognized organizational entity designed to provide goods and/or services to 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. ^[1]

1 Effect on consumers
2 Sales Tax Planning
3 See also
4 References

Effect on consumers

Sales taxes are considered to be regressive tax; that is, low income people tend to spend a greater percentage of their income in taxable sales (using a cross section time-frame) than higher income people. A regressive tax is a Tax imposed in such a manner that the Tax rate decreases as the amount subject to taxation increases However, this calculation is derived when the tax paid is divided not by the tax base (the amount spent) but by income, which is argued to create an arbitrary relationship. If all purchases are subject to the same tax rate, the tax rate itself is flat with higher income people paying more tax as they consume more. While the tax on spending as a percentage of gross income may be regressive, the effective tax rates can be progressive on consumption due to exemptions or rebates. A progressive tax is a Tax imposed so that the Tax rate increases as the amount subject to taxation increases If a sales tax is to be related to income, then the unspent income can be treated as tax-deferred (spending savings at a later point in time), at which time it is taxed. Deferred tax is an Accounting concept meaning a future tax Liability or Asset, resulting from temporary differences between book (accounting Sales taxes often exclude items or provide rebates in an effort to create progressive effects. In many locations, "necessary" items such as non-prepared food, clothing, or prescription drugs are exempt from sales tax to alleviate the burden on the poor.

A related type of tax is the value-added tax or VAT. Value added tax ( VAT) or goods and services tax ( GST) is a consumption Tax levied on value added. It is a system in which all businesses remit taxes on their sales but they are also refunded the amount of VAT remitted by their suppliers. In addition to avoiding cascading, under VAT there is no need for government to determine which sales are taxable and which are not, since all sales--retail, wholesale and intermediate--are taxed. Some or all of these taxes may be refunded but it generates a lot of paperwork (and income). The VAT paperwork can be burdensome but it remains a major source of tax income for most of the European Union, Mexico and other countries which charge on average a 15-25% VAT rate. Canadian sales taxes range from 5% in Alberta to an effective 16. 6% in Prince Edward Island where sales tax is also applied to the federal Goods and Services Tax. The Canadian Goods and Services Tax ( GST) ( French:) is a multi-level Value-added tax introduced in Canada on January 1, 1991

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. Terminology and usage As a cultural term "Scandinavia" has no official definition and is subject to usage by those who identify with the culture in question as well Norway, Denmark and Sweden have the highest VATs at 25%, although reduced rates are used in some cases, as for groceries and newspaper. Norway ( Norwegian: Norge ( Bokmål) or Noreg ( Nynorsk) officially the Kingdom of Norway, is a Constitutional The Kingdom of Denmark ( ˈd̥ænmɑɡ̊ (archaic ˈd̥anmɑːɡ̊ commonly known as Denmark, is a country in the Scandinavian region of northern Europe "Sverige" redirects here For other uses see Sweden (disambiguation and Sverige (disambiguation. In some countries, there are multiple levels of government which each impose a sales tax. For example, sales tax in Chicago(Cook County), IL is 9%, consisting of 6. Chicago (ʃɪˈkɑːgoʊ is the largest City by population in the state of Illinois and the American Midwest of the United States. 25% state, 1. 25% city, 0. 75% county and 0. 75% regional transportation authority. And in Baton Rouge, Louisiana, the tax is 9%, consisting of 4% state and 5% local rate. 1 In Tennessee the sales tax is 9. Tennessee ( is a state located in the Southern United States. 25%, due to the lack of a state income tax. However, there is no nationwide sales tax in the United States.

Since the 1990s, the idea of replacing the income tax with a national sales tax has been floated in the United States; many of the actual proposals would include giving each household an annual rebate, paid in monthly installments, equivalent to the percentage of the tax (which varies from 15% to 23% in most cases) multiplied by the poverty level based on the number of persons in the household, in an effort to create a progressive effect on consumption. The 1990s collectively refers to the years between and including 1990 and 1999 The United States of America —commonly referred to as the The poverty threshold, or poverty line, is the minimum level of Income deemed necessary to achieve an adequate Standard of living in a given country While many political observers consider the chances remote for such a change, the FairTax Act has attracted more cosponsors than any other fundamental tax reform bill introduced in the House of Representatives. The FairTax is a proposed change to the federal tax laws of the United States that would replace all federal income taxes with a single national retail The United States House of Representatives is one of the two chambers of the United States Congress; the other is the Senate.

In the United States, if a consumer purchases goods from an out-of-state vendor, the consumer's state may not have jurisdiction over the out-of-state vendor and no sales tax would be due. Personal property is a type of Property. In the Common law systems personal property may also be called chattels or personalty. However, the customer's state may make up for the lost sales tax revenue by charging the consumer a use tax in an amount equal to the sales taxes avoided. A use tax is a type of Excise tax levied in the United States. For example, if a person purchases a computer from a local brick-and-mortar retail store, the store will charge the state's sales tax. However, if that person purchases a computer over the internet or from an out-of-state mail-order seller, sales tax may not apply to the sale, but the person could owe a use tax on the purchase. Some states may also charge a use tax on the in-state transfer of used goods such as automobiles, boats and other consumer goods.

Because of exemptions, not all goods and services are taxed.

Sales Tax Planning

In the United States, corporate sales tax planning may include the following:

Determination of ways to legally reduce the amount of tax due on a transaction. For instance, how a company structures its invoices can affect the taxability of the entire transaction. In many states an item can become taxable if not separately stated on the invoice.
Review of company purchases to determine which assets may qualify for exemptions. Finding overlooked exemptions often results in significant savings.
Periodic review of procedures relating to Sales & Use Tax data gathering and retention so that proper supporting documentation, including exemption and resale certificates, are available in the event of a State audit.

References

^ Types of Sales Taxes. In Canada there are three types of Sales taxes provincial sales taxes or PST the federal Goods and Services Tax or GST, and the Harmonized Sales Tax or HST Sales taxes in the United States are a Tax added onto the price of goods or services that are purchased in the United States. The GST (Goods and Services Tax is a Value added tax of 10% on most goods and services transactions in Australia. A sales tax audit is the examination of a company’s financial documents by a U A flat tax (short for flat rate tax is a Tax system with a constant tax rate Excise or Excise tax (sometimes called an excise duty) is a type of Tax charged on goods produced within the country (as opposed to Customs duties A turnover tax is similar to a Sales tax or a VAT, with the difference that it taxes intermediate and possibly capital goods Business Owner's Toolkit. Retrieved on 2007-10-10. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 680 - Battle of Karbala: Shia Imam Husayn bin Ali, the grandson of the Prophet Muhammad, is decapitated

Dictionary

-noun

A local or state tax imposed as a percentage of the selling price of goods or services payable by the customer. The tax is not recognized as the seller's earnings; the seller only collects the tax and transmits the same to local or state authorities.

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Contents

Effect on consumers

Sales Tax Planning

See also

References

Dictionary

sales tax

-noun