The United States of America continues using its version of Sales Tax system in taxing goods and services 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 the US is seriously considering embracing this process to boost vital tax vatvalidation revenues.
For years, the US has stuck to its version of Sales Tax or Retail Tax in which the consumer may be the only one afflicted by tax on services and goods. The tax rates in the US are usually 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 used only once, vat is applied every time goods or services change hands, however, 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 becoming aggressive on implementing vat in the United States in the long term.
However, 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 usage of goods and services. Thus, not many in the present administration are prepared to pursue the idea of bringing vat to the country. Most people agree, though that vat does promise to increase revenues while plugging tax leaks to a great extent.
If the US does implement vat in the same way it’s been done in the UK or other European countries then traders will need to make an application for vat registration after they go over the vat threshold figure. Each vat registered trader will 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 reclaim vat refunds for vat amounts already paid. Even though the system sounds complex, in reality, it is extremely easy to understand once traders get the hang of it, whilst the US government reaps higher tax revenues with each passing transaction.
It could 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 close the huge deficit. This can include cutting down on expenses or levying additional taxes on certain goods or certain elements of society. However, more and more people appear to be prepared to take the idea of introducing vat in the US after looking at other countries which have managed to boost their tax revenues resulting from vat. Maybe, only efforts and a terrible deficit could usher in vat in to the USA within the next few years.
While most 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 own version of Sales Tax. However, growing deficit and an inability to control expenses could soon see usa vat being ushered into the country, particularly if the powers-to-be decide to take a concrete step in that direction.