The chances of usa vat being implemented increases with deficit

The United States of America has continued with 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 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, America has stuck to its version of Sales Tax or Retail Tax where the end user is the only one subjected to tax on services and goods. The tax rates in America are usually very low and in most cases peak at around 13% while vat or value added tax rates in some countries are as high as 25%. Additionally, while sales tax is applied only once, vat is applied each 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 coming years.

On the other hand, politicians fear that implementing usa vat could raise prices and pose a problem to the already-burdened common man, and in turn cause reduced usage of goods and services. Thus, not many in the present administration are prepared to pursue the idea of bringing vat into the country. Most people agree, though that vat does promise to increase revenues while plugging tax leaks to some great extent.

In case the US does implement vat in the same way it’s been carried out the United Kingdom or other European countries then traders will need to make an application for vat registration once 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 also the applicable vat rates on services and goods. In addition, traders will also need to file regular vat returns and could claim back vat refunds for vat amounts already paid. Although the system sounds complex, in fact, it is quite simple to follow once traders get used to 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 seal the huge deficit. This includes cutting down on expenses or levying additional taxes on certain goods or certain sections of society. However, more people appear to be open to the very idea of introducing vat into the US after considering other countries which have managed to boost their tax revenues resulting from vat. Maybe, only efforts and an unbearable deficit could usher in vat in to the USA within the next several 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, particularly if the powers-to-be choose to take a concrete step in that direction.