The nation of America has continued 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. Most of Europe along with several developed and developing countries have adopted vat for taxing services and goods, and also the US is seriously considering embracing this method to raise vital tax https://vatvalidation.com revenues.
For a long time, America has stuck to its version of Sales Tax or Retail Tax in which the end user is the only one afflicted by tax on services and goods. The tax rates in America are also quite low and in most cases peak around 13% while vat or value added tax rates in many countries are up to 25%. In addition, while sales tax is used only once, vat is applied every time services or goods 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 getting aggressive on implementing vat in the United States in the long term.
On the other hand, politicians fear that implementing usa vat could raise prices and pose a problem for the already-burdened common man, and as a result lead to reduced consumption of goods and services. Thus, not many in the present administration are prepared to pursue the idea of bringing vat to the country. Many people agree, though that vat does promise to increase revenues while plugging tax leaks to a great extent.
In case the US does implement vat just as it has been carried out the UK or any other European countries then traders will have 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 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. Even though the system sounds complex, in fact, it is extremely simple to follow once traders get the hang of it, whilst 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 massive deficit. This includes lowering expenses or levying additional taxes on certain goods or certain elements of society. However, more people appear to be prepared to take the very idea of introducing vat into the US after considering other countries that have managed to boost their tax revenues due to vat. Maybe, only efforts and a terrible deficit could usher in vat into the USA within the next few years.
While most other countries including Europe have moved to vat in a bid to recover more taxes on goods and services, the US has stayed 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, especially if the powers-to-be decide to take a concrete step in that direction.