A sales tax is imposed at the point of sale. It is usually computed using a fixed rate applied to the taxable amount of a product. It may either be included in the price of the product, which is usually the case in supermarkets, or may be a separate rate added on before the sale is completed. This can also be applied to both products and services.
Sales taxes are generally unavoidable and quite simple to collect. The burden usually falls on the end buyer rather than on the seller, although in certain cases and markets the seller may also shoulder the tax. Sales taxes fall under the classification of regressive taxes, as they ultimately have a greater effect on poorer families than higher-income ones.
There are various types of sales taxes. For instance, a retail sales tax is charged to the end consumer who completes the purchase of an item. Gross receipts taxes, on the other hand, are imposed on all levels, from the end of production to the actual consumer.
Excise taxes are imposed on specific products and are normally shouldered by the wholesaler. Sin taxes, on the other hand, are very specific to certain products which have been deemed unnecessary commodities and cause a degree of harm to the consumer. Usual examples are taxes imposed on tobacco and alcohol.
Sales tax laws vary not only from country to country, but from state to state as well. In the case of deliveries, compliance with tax laws does not usually depend on the state of origin, but the destination. For services, this translates into where the services are actually rendered.
