The likelihood of usa vat being implemented increases with deficit

The nation of America continues with its version of Sales Tax system in taxing goods and services however the chances 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 goods and services, and also the US is seriously thinking of embracing this method 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 is the only one afflicted by tax on services and goods. The tax rates in America are usually very low and in most cases peak around 13% while vat or value added tax rates in some countries are up to 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 in the system. However, with the yearly US budget deficit running clearly more than a trillion dollars, and rising with each passing year, advocates of vat are getting aggressive on implementing vat in the country in the coming years.

However, 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, very few 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 raise revenues while plugging tax leaks to some great extent.

If the US does implement vat in the same way it has been carried out the UK or other country in Europe then traders will need 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 the applicable vat rates on goods and services. In addition, traders will also need to file regular vat returns and can reclaim 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 could take several years for usa vat to ultimately be implemented in the country as politicians and economists make an effort to explore other avenues to seal the huge deficit. This can include lowering expenses or levying additional taxes on certain goods or certain sections of society. However, more and more people seem to be prepared to take the very idea of introducing vat in the US after looking at other countries that have been able to boost their tax revenues due to vat. Maybe, only efforts and a terrible deficit could usher in vat in to the USA within the next few years.

While many 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, especially if the powers-to-be choose to take a concrete step in that direction.