The United States of America has continued with its version of Sales Tax system in taxing goods and services but the chances of usa vat being implemented increases with deficit levels rising beyond uncomfortable levels. Most of Europe along with several developed and developing countries have adopted vat for taxing goods and services, and the US is seriously thinking of embracing this method to raise vital tax revenues.
For years, the US has stuck to its version of Sales Tax or Retail Tax where the end user is the only one subjected to tax on goods and services. The tax rates in the US are also quite low and usually peak at around 13% while vat or value added tax rates in some countries are as high as 25%. In addition, while sales tax is applied only once, vat is applied each time goods or services change hands, although there are provisions for vat refunds in 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 coming years.
On the other hand, politicians fear that implementing usa vat could raise prices and pose a problem for the already-burdened common man, and in turn lead to reduced consumption of goods and services. Thus, not many in the current administration are willing to pursue the idea of bringing vat into the country. Most people agree, though that vat does promise to raise revenues while plugging tax leaks to a great extent.
In case the US does implement vat just as it has been done in the UK or other European countries then traders will need to apply for vat registration once they cross 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 will also need to file regular vat returns and could claim back vat refunds for vat amounts already paid. Even though the system sounds complex, in reality, it is quite simple to follow once traders get the hang of it, even as the government reaps higher tax revenues with each passing transaction.
It might take several years for usa vat to ultimately be implemented in the country as politicians and economists try to explore other avenues to close the huge deficit. This includes cutting down on expenses or levying additional taxes on certain goods or certain sections of society. However, more people seem to be open to the idea of introducing vat into the US after looking at other countries that have managed to boost their tax revenues due to vat. Maybe, only time and an unbearable deficit could usher in vat into the USA within the next few years.
While most other countries including Europe have shifted to vat in a bid to collect more taxes on goods and services, the US has remained loyal to its own version of Sales Tax. However, growing deficit and an inability to control expenses could soon see usa vat being ushered into the country, especially if the powers-to-be decide to take a concrete step in that direction.