[SNE] 2019-2024 Northern Border Program (13th part)

VAT Decreased

What is the sales tax?

The sales tax in the USA is a tax or set of taxes, which are regularly imposed by the federal and state governments, although there are also cities that charge a relative tax. And what is done, is to add each rate and the final supplier of the productive chains, it is charged jointly to the final consumer. That's why there are very different sales tax in different states (main collectors), and obvious when some cities do charge and others do not.

And that possibility of charging differentiated generates some places some competitiveness against others. However, it is not a competitiveness simply for the price. For example, New York has the highest sales tax in the US and Santa Teresa, New Mexico, one low. However, the competitiveness between these cities is not based on the sales tax, but a host of other elements to contemplate, which at least in the example are greater in New York, regarding Santa Teresa.

Then, it is only a tax on the final consumer and differentiated by the tax collection needs of each jurisdiction and, in principle, it has no link to the Income Tax (whether individual or corporate).

In the end, being a tax on the final consumer, then it generates an impact on the price of the goods that are paid. Therefore, its greater or lesser dimension, although it is not an absolute element in terms of competitiveness, at least has some impact.

Now, the US citizenship and its culture of paying taxes to its federal government and it's subnational are notoriously greater than Mexico. In addition to that, there is a banking culture so broad that by itself inhibits evasion in general.

Therefore, raising or lowering the sales tax rate does not encourage or inhibit the payment of income taxes, and as we say at the point of competitiveness, it does not make a city more or less competitive, at least in general comparison.

(continues part 14)