> For general-purpose sales-tax...in the United States...for the time being.
>
> I believe the current tax on new vehicles in Israel is 70+% and seem to
> recall that it was well over 100% at one time. Sales taxes already vary by
> product (in California, food is 0% for example) as well as state, county,
> city. I can certainly imagine some locale pushing for taxes well over 100%
> on the sin-du-jour (alcohol, tobacco, sugar, fat..)
In the E.U., sin taxes are charged as excise duty. A manufacturer pays
duty (a fixed amount per unit of ethanol or whatever), and sells it on
to a retailer at a price that (presumably) factors in the cost to him
of paying that duty, in addition to VAT - they charge tax on the tax.
The retailer doesn't have to give sinful goods any special treatment.
When selling on those goods they just charge VAT, in turn, at the
standard rate. I imagine it's a similar situation in the U.S.
This minimises tax evasion, carousel fraud, etc, and takes the
burden/responsibility of collecting such massive taxes (effectively
80%+ of the cost of a pack of cigarettes) higher up the supply chain.
Taxes on cars are covered by "vehicle registration tax" and road tax
here in Ireland, in addition to charging VAT at the standard rate on
top of the total, inclusive cost. Charging massive rates like 70% is
avoided. Consumption taxes are supposed to be easy to collect.
If you wonder why a manufacturer charges VAT to a retailer or non-end
user, well, that's one of the distinctions between VAT and sales tax
(they pay, but they claim it back later, whereas an individual cannot
claim it back).
Regards,
Peter Geoghegan
