The Glossary of Economics Terms defines sales tax as ‘a tax levied on the sale of a good or service, which is usually proportional to the price of the good or service sold.’ Sales tax is a consumption tax, assessed when someone purchases something. Most states charge sales tax, with there being a flax tax rate, with local and county percentages being added on. While paying sales tax may seem undesirable to a person, the collection of sales tax can be very beneficial to lots of municipalities, and are arguably one of the best taxes to have.
Fairness for all
One great thing about sales tax is not everyone is taxed the same, depending on their income. While you don’t get some tax off a product for not earning as much as another person, you will naturally purchase less items and services simply because they aren’t affordable to you. This means you don’t have to pay any unfair taxes, unless you choose to.
Easily collectable and non-evadable
Unlike other types of taxes, that have to be accounted for and need a lot of documentation, sales tax is much easier to deal with. Collection is upfront – embedded into the price of goods and services, and so is automatically collected when a good or service is sold. This makes life much easier for tax collectors as well as taxpayers. This also means it’s non-evadable for many, because it is included in the price of a good or service. A taxpayer can’t elude this type of tax.
For the state: revenue, contribution, and simplicity
While sales tax may not seem like a very big tax, as other taxes take a much bigger percentage of pay, everything adds up. Sales tax is incurred on many items – both day to day ones and luxury ones, as well as services. All these small amounts, when collected, generate a large amount of revenue for the government. This is a great way for the government to get money easily, without it being too hard on the general public. This money can then be used for the wellbeing of the nation and the nation’s citizens.
Here are just a few examples of what sales taxes can do:
- Community development: these can include public buildings, roads and other infrastructure improvements
- Public services: a major portion of sales tax is often given to schools, parks, libraries and other such services
- Protective services: these typically include a community’s police and fire departments
- Special purpose: sales tax often funds lots of different projects , that are short term
The good thing about sales tax is that everybody can pay them, so everyone can contribute to helping the nation. Most of the time poorer citizens don’t have to pay any type of tax, and lots of government revenue is spent on these citizens. Sales taxes are small but helpful ways of letting every single person out there feel as if they are doing their bit to contribute to the nation’s income.
Taxing can become very complex – all around the world, and there are so many types of it too. People will be taxed at different rates, because of variations in how much salary they earn. This can confuse end payers, and various records have to be maintained, detailing lots of information to avoid legal issues and audits, particularly for businesses. On the other hand, sales taxes are very simple to have. Everyone has to pay the same price to buy a product, with the tax already calculated for you, and all you have to do is pay upfront.
While at times sales tax can seem to be a little more than expected, it’s beneficial for the government, economy and many businesses, so it’s always a good idea to support the state.
TRUiC has a fast and easy way to help you calculate your tax. Visit their site for more.