The United States of America continues using its version of Sales Tax system in taxing services and goods however the likelihood of usa VAT being implemented increases with deficit levels rising beyond uncomfortable levels. Nearly all of Europe together with several developed and developing countries now utilize vat for taxing goods and services, and also the US is seriously thinking of embracing this method to boost vital tax vat validation revenues.
For a long time, the US has stuck to its version of Sales Tax or Retail Tax where the end user may be the only one subjected to tax on goods and services. The tax rates in America are also very low and usually peak at around 13% while vat or value added tax rates in some countries are up to 25%. In addition, while sales tax is applied just once, vat is applied every time services or goods change hands, although there are provisions for vat refunds within the system. However, with the yearly US budget deficit running clearly over a trillion dollars, and rising with each passing year, proponents of vat are getting aggressive on implementing vat in the country in the long term.
On the other hand, politicians fear that implementing usa vat could raise prices and pose a challenge for the already-burdened common man, and in turn lead to reduced consumption of services and goods. Thus, not many in the present administration are willing to pursue the very idea of bringing vat into the country. Most people agree, though that vat does promise to raise revenues while plugging tax leaks to a degree.
In case the US does implement vat in the same way it’s been done in the United Kingdom or any other European countries then traders will have to make an application for vat registration after they go over the vat threshold figure. Each vat registered trader will then need to make a vat invoice that clearly mentions the vat number and the applicable vat rates on goods and services. In addition, traders must also file regular vat returns and can reclaim vat refunds for vat amounts already paid. Even though the system sounds complex, in fact, it is quite easy to understand once traders get used to it, whilst the government reaps higher tax revenues with each passing transaction.
It might take a few years for usa vat to ultimately be implemented in the United States as politicians and economists try to explore other avenues to seal the huge deficit. This can include lowering expenses or levying additional taxes on certain goods or certain sections of society. However, more and more people seem to be prepared to take the very idea of introducing vat in the US after considering other countries that have been able to boost their tax revenues resulting from vat. Maybe, only efforts and an unbearable deficit could usher in vat into the USA within the next several years.
While many other countries including Europe have shifted to vat in a bid to recover more taxes on services and goods, the US has remained loyal to its very own version of Sales Tax. However, growing deficit and an inability to control expenses could soon see usa vat being ushered to the country, particularly if the powers-to-be decide to take a concrete step in that direction.