) or added at the point of sale (tax-exclusive).Most sales taxes are collected from the buyer by the seller, who remits the tax to agovernment agency. The economic burden of the tax usually falls on the purchaser, but insome circumstances may fall on the seller. Sales taxes are commonly charged on sales of goods, but many sales taxes are also charged on sales of services. Ideally, a sales taxwould have a high compliance rate, be difficult to avoid, and be simple to calculate andcollect.
A conventional or retail sales tax is charged only on the sale of an item to its final enduser. To achieve this, a purchaser who is not an end user is usually required to providethe seller with a "resale certificate," which states that the seller is purchasing an item toresell it. The tax is charged on each item sold to purchasers who do not provide such acertificate.Other types of sales taxes include the following:
Gross receipts taxes, levied on all sales of a business. This tax has been criticizedfor its "cascading" or "pyramiding" effect, in which an item is taxed more thanonce 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 the retail seller.
Value Added Taxes,in which tax is charged on all sales, thus avoiding the needfor a system of resale certificates. Tax cascading is avoided by applying the taxonly 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.
Use tax,imposed directly on the consumer of goods purchased without sales tax,generally items items purchased from a vendor in another state and delivered tothe purchaser by mail or common carrier . Use taxes are commonly imposed bystates in the United States, but are difficult to enforce on consumers, except for large items such as automobiles and boats.Most countries in the world have sales taxes or value-added taxes at all or several of thenational, state, county or city government levels. Countries in Western Europe,especially
inScandinaviahave some of the world's highest valued-added taxes. Norway,Denmark
and Swedenhave the highest VATs at 25%
, although reduced rates are used in somecases, as for groceries and newspaper.