Types of Sales Tax
The type of sales taxes imposed vary according to the taxation policy of the government. However, different types of sales taxes include:
1. Retail Sales Tax: Retail Sales Tax is imposed on goods sold by a retailer to the customer directly. It is charged on the final sale of the product.
2. Manufacturers’ Sales Tax: Manufacturers’ Sales Tax is charged on the manufacturer of certain goods and services. Although the tax amount paid by the manufacturer is recovered by the customer by adding it to the final price of the goods.
3. Wholesale Sales Tax: Wholesale Sales Tax is levied on goods and services sold by a wholesaler to the retailer or sometimes to the customer directly.
4. Use Tax: Use Tax is paid by the customer for using those goods that are purchased without sales tax. This tax is paid to the state government of the state where the goods have been used. These goods are generally purchased from those vendors who do not fall under the tax jurisdiction.
5. Value Added Tax (VAT): Value Added Tax (VAT) is levied at each stage of production and distribution and is known as multi-stage tax. The amount of tax burden is shifted to the ultimate consumer of the product.