The likelihood of usa vat being implemented increases with deficit

The United States of America has continued using its version of Sales Tax system in taxing services and goods but the chances of usa VAT being implemented increases with deficit levels rising beyond uncomfortable levels. Most of Europe together with several developed and developing countries now utilize vat for taxing goods and services, and also the US is seriously thinking of embracing this process to raise vital tax revenues.

For a long time, America has stuck to its version of Sales Tax or Retail Tax in which the end user may be the only one afflicted by tax on goods and services. The tax rates in America are usually quite low and usually peak at around 13% while vat or value added tax rates in some countries are up to 25%. Additionally, while sales tax is used only once, vat is used 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, advocates of vat are getting 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 as a result lead to reduced consumption of goods and services. Thus, very few in the present administration are willing to pursue the idea of bringing vat into the country. Many people agree, though that vat does promise to increase revenues while plugging tax leaks to some degree.

If the US does implement vat just as it’s been carried out the UK or any other European countries then traders will need to apply for vat registration once they go 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 must also file regular vat returns and can reclaim vat refunds for vat amounts already paid. Although the system sounds complex, in fact, it is quite easy to understand once traders get used to it, whilst the government reaps higher tax revenues with each passing transaction.

It might take a few years for usa vat to ultimately be implemented in the United States as politicians and economists make an effort to explore other avenues to seal the massive deficit. This includes lowering expenses or levying additional taxes on certain goods or certain elements of society. However, more and more people seem to be open to the idea of introducing vat in the US after looking at other countries which have been able to boost their tax revenues resulting from vat. Maybe, only efforts and an unbearable deficit could usher in vat into the USA over the following several years.

While most other countries including Europe have moved to vat in a bid to collect more taxes on services and goods, 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 choose to take a concrete step in that direction.