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Best Sales Tax and VAT Compliance Statistics
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- According to the most recent estimates from the International Centre for Tax and Development, total tax revenues account for more than 80% of total government revenue in about half of the countries in the world – and more than 50% in almost every country. [0]
- Indeed, until 1910 less than 10% of national income was collected by these governments through taxation – just enough for them to fulfil basic functions, such as maintaining order and enforcing property rights. [0]
- As we can see from the most recent data, at one extreme of the spectrum we have countries such as Cuba, France, Denmark, Norway and Sweden, where total tax revenues are higher than 30%. [0]
- And at the other extreme, we have countries such as Libya and Saudi Arabia, where taxes account for less than 2% of national income. [0]
- The case of Turkey stands out in 1980 it collected about 13.5% of GDP in taxes , yet by 2001 it had nearly doubled tax revenues – almost catching up with the US. [0]
- It is also worth noting the important role of social security revenues in advanced economies at 10% of GDP in 1996, social security revenues are almost 10 times larger than in developing countries. [0]
- In the UK, in 1978 the last pound of earned income at the highest bracket was essentially entirely taxed (98%). [0]
- Today the corresponding figure is less than half (45%). [0]
- In the US, for example, if a married couple earns $40,000 a year, they pay federal income taxes at a rate of 10% on the first $18,500 or so, and at a rate of 15% on the rest. [0]
- Hence, while the marginal rate applied to the last dollar earned is 15%, the effective income tax rate is lower. [0]
- These figures use estimated tax brackets for 2016 from the Tax Foundation. [0]
- Up until that point, and since around 1995, tax rates for the richest 1% went down every year. [0]
- The next visualisation, from Piketty and Saez shows estimated average tax rates in France, the US and the UK, at two points in time 1970 and 2005. [0]
- Notice that these are 19 Displayed are rates for the bottom 90% of the income distribution, as well as higher percentiles. [0]
- As we can see, the cost of collections dropped, from over 4.5% of the amounts collected in the mid 19th century, to 2% since the middle of the 20th century. [0]
- Yet cross country differences are substantial, with declines ranging from about 40% in Denmark and Ireland, to about 8% in South Korea. [0]
- The US – a country with high baseline levels of inequality – achieves a reduction of around 17%, which is a little over half of the OECD average. [0]
- n/a Nebraska 5.50% Included in Base Nevada 6.85% Included in Base New Hampshire 0.00% n/a New Jersey 6.875% Exempt New Mexico 5.125%. [1]
- Included in Base New York 4.00% Exempt North Carolina 4.75% Included in Base North Dakota 5.00% Included in Base Ohio 5.75% Included in Base Oklahoma 4.50% Included in Base Oregon. [1]
- 0.00% n/a Pennsylvania 6.00% Exempt Rhode Island 7.00%. [1]
- The California Board of Equalization estimated that California would lose $20 million in state and local revenue from this one. [1]
- change.[12] New York estimated that it would lose $10 million in revenue from its feminine hygiene exemption. [1]
- The five states with the highest average combined state and local sales tax rates are Louisiana , Tennessee , Arkansas , Washington , and Alabama. [2]
- No state rates have changed since Utah increased the state collected share of its sales tax from 5.95 percent to 6.1 percent in April 2019. [2]
- The five states with the lowest average combined rates are Alaska , Hawaii , Wyoming , Wisconsin , and Maine. [2]
- California has the highest statelevel sales tax rate, at 7.25 percent.[2] Four states tie for the second highest statewide rate, at 7 percent Indiana, Mississippi, Rhode Island, and Tennessee. [2]
- The lowest nonzero state level sales tax is in Colorado, which has a rate of 2.9 percent. [2]
- Five states follow with 4 percent rates Alabama, Georgia, Hawaii, New York, and Wyoming.[3]. [2]
- No state rates have changed since April 2019, when Utah’s state collected rate increased from 5.95 percent to 6.1 percent. [2]
- We represent this anomaly as a negative 0.03 percent statewide average local rate , and the combined rate reflects this subtraction. [2]
- Despite the slightly favorable impact on the overall rate, this lower rate represents an implicit acknowledgment by New Jersey officials that their 6.625 percent statewide rate is uncompetitive with neighboring Delaware, which has no sales tax. [2]
- 5.30%310.45%5.75%410.70%Wshington6.50%92.79%9.29%44.00%West Virgini6.00%170.52%6.52%311.00%Wisconsin5.00%330.43%5.43%431.75%Wyoming4.00%401.22%5.22%442.00%City, county nd municipl rtes vry. [2]
- Three states levy mandatory, statewide, local add on sales taxes at the state level California (1%), Utah (1.25%), and Virginia (1%). [2]
- Salem County, N.J., is not subject to the statewide sales tax rate and collects a local rate of 3.3125%. [2]
- Three states levy mandatory, statewide, local add on sales taxes at the state level California (1%), Utah (1.25%), and Virginia (1%). [2]
- Salm County, N.J., is not subjct to th statwid sals tax rat and collcts a local rat of 3.3125%. [2]
- For example, evidence suggests that Chicago area consumers make major purchases in surrounding suburbs or online to avoid Chicago’s 10.25 percent sales tax rate.[9]. [2]
- Hawaii has the broadest sales tax in the United States, but it taxes many products multiple times and, by one estimate, ultimately taxes 119 percent of the state’s. [2]
- This base is far wider than the national median, where the sales tax applies to 36 percent of personal income.[17] Sales Tax Clearinghouse publishes quarterly sales tax data at the state, county, and city levels by ZIP code. [2]
- We weight these numbers according to Census 2010 population figures to give a sense of the prevalence of sales tax rates in a particular state. [2]
- Because of this, some sources will describe California’s sales tax as 6.0 percent. [2]
- [4] This rate includes two levies, summing 1.25 percentage points, which are imposed statewide but distributed to localities. [2]
- Any such proposal would then require the unanimous approval of the 27 EU Member States as well as sufficient lead in time for businesses to adapt, meaning that any harmonised changes are likely to be a number of years away. [3]
- As a ratio of GDP, in 2020 tax revenue accounted for 41.3 % of GDP in the European Union and 41.8 % of GDP in the euro area. [4]
- As a percentage of GDP, EU and euro area tax revenue increased in 2020. [4]
- In 2020, tax revenue made up 89.3 % of total general government revenue in the European Union. [4]
- In 2020 in the EU, taxes on production and imports accounted for 13.4 % of GDP and current taxes on income, wealth, etc. stood at 13.0 % of GDP. [4]
- as a % of GDP decreased from 2007 to 2010, but increases were seen in the period from 2011 to 2013. [4]
- From 2008 to 2009, the share of social contributions increased by 0.5 p.p. to 14.4 % of GDP, then decreased by 0.2 p.p. in 2010. [4]
- Between 2011 and 2019 the share of social contributions more or less remained stable before increasing by 0.5 p.p. in 2020 to stand at 14.6 % of GDP. [4]
- In 2020, tax revenue in the EU stood at 41.3 % of GDP, and accounted for 89.3 % of total government revenue. [4]
- The ratio of tax revenue to GDP in the euro area was higher than in the EU, at 41.8 %. [4]
- Among EU countries, the strongest decreases in absolute tax and social contribution revenue from 2019 to 2020 were observed by Greece (11.0 %), Croatia (9.4 %), Malta (7.4 %), Italy (6.7 %), Austria and Cyprus . [4]
- Among EFTA countries, a strong decrease was observed for Norway . [4]
- At the level of the EU, tax revenue decreased by 3.7 % from 2019 to 2020 or by around EUR 215 billion. [4]
- In percentage points, the highest increases from 2019 to 2020 were recorded by Spain (from 35.4% in 2019 to 37.5 % in 2020), ahead of Portugal (from 36.7 % to 37.6 %). [4]
- The largest decreases in the taxto GDP ratio were observed in Ireland (from 22.7 % in 2019 to 20.8 % in 2020), Luxembourg (from 40.8 % to 39.8%), Greece (from 41.9 % to 41.3 %) and Austria (from 43.1 % to 42.6 %). [4]
- From its last spike in 2007 (40.1 % of GDP). [4]
- The ratio for the euro area also decreased from its peak of 40.1 % in 2007 to 39.3 % of GDP in 2010. [4]
- In 2020 the EU and euro area tax revenue increased as a percentage of GDP, which was due to a decrease in nominal GDP in 2020 as an effect of lower economic activity due to COVID. [4]
- (remained stable at 13.0 % of GDP). [4]
- Between 2014 and 2019, taxes on production and imports grew in line with nominal GDP, meaning that as a ratio to GDP they remained stable at 13.7 %, except for year 2017 when taxes on production and imports stood at 13.6 %. [4]
- In 2020 the ratio decreased to 13.4 % of GDP as tax revenue specifically from taxes on products such as VAT declined faster than GDP. [4]
- In 2020 in the EU, revenue from taxes on products accounted for about 80.9 % and VAT for around 51.7 % of the total taxes on production and imports. [4]
- In 2020, the highest ratios of taxes on production and imports relative to GDP were recorded in Sweden (21.8 %), Croatia (18.8 %) and Hungary (18.3 %). [4]
- as a ratio to GDP amounted to 13.0 %, while taxes on individual or household income made up the largest share of this (9.9 % of GDP). [4]
- By far the highest importance of current taxes on income, wealth, etc. is noted for Denmark, which raised the equivalent of 30.9 % of GDP from these taxes in 2020. [4]
- The next highest figures are recorded by Sweden, Finland, Luxembourg and Belgium, which raise 18.2 %, 16.0 %, 15.9 % and 15.8 % of GDP respectively from current taxes on income, wealth, etc. [4]
- At the other end of the scale in 2020, Romania (4.7 % of GDP), Bulgaria (5.9 % of GDP) and Croatia (6.5 % of GDP). [4]
- In 2020, actual social contributions accounted for the highest ratios in GDP terms in Slovenia (16.9 %), Germany (16.8 %), Czechia (15.9 %) and for the lowest ratios in Denmark (0.7 %) and Sweden (3.2 %) as well as Iceland (3.0 %). [4]
- In 2020, in terms of GDP, they accounted for 2.5 % in both Belgium and Greece, 2.3 % in Portugal and 1.9 % in France. [4]
- In eleven EU and EFTA countries the ratio was 0.1 % of GDP or less in 2020. [4]
- These taxes accounted for 0.3 % of GDP in the EU in 2020. [4]
- They range from 0.7 % of GDP in Belgium and France, 0.4 % of GDP in Spain, to being non existent in Estonia, Cyprus, Portugal, Romania, Slovakia and Sweden. [4]
- In 2020, for the EU, this adjustment amounted to 0.1 % of GDP, with the highest ratios being registered for Denmark (0.6 %) and for France (0.5 %). [4]
- Taxes and social contributions imposed at state and local government level made up 18.3 % of total tax and social contribution revenue in 2020 in the EU. [4]
- The social security funds subsector was relatively important in terms of tax revenue in France (51.6 % of the total). [4]
- followed by Slovenia (44.0 %), Slovakia (42.6 %), Germany (40.7 %), Romania (38.7 %) and Poland (37.0 %). [4]
- In Sweden (30.6 % of the total), Iceland (29.8 %), Denmark (26.6 %) and Finland (24.6 %). [4]
- The lowest share of central government tax and social contribution revenue was recorded by Germany (26.3 %), Switzerland (33.3 %), France (35.6 %), Spain (38.4 %), Slovenia (45.7 %), Finland and Belgium (both 47.4 %). [4]
- + capital taxes capital transfers from general government to relevant sectors representing taxes and social contributions assessed but unlikely to be collected. [4]
- In terms of level of tax revenue, Indicator 4 is roughly one percentage point of GDP higher than the Indicator 2 measure, although this difference varies across countries. [4]
- According to ESA 2010, taxes and social contributions should be recorded on an accrual basis. [4]
- The tax is 6.25% of the sales price of the meal. [5]
- (Before August 1, 2009, the tax rate was 5%.). [5]
- The rate is .75% of the vendor’s gross receipts from restaurant meal sales. [5]
- This local excise is imposed along with the state sales tax on meals, bringing the effective tax rate on sales of meals to 7% in a city or town that has decided to adopt it. [5]
- Massachusetts meals tax vendors are responsible for Registeringwith the DOR to collect the sales tax on meals Collecting a 6.25% sales tax (and, where applicable, a .75% local option meals excise). [5]
- As a meals tax vendor, you must add a 6.25% sales tax (and, where applicable, the .75% local option meals excise). [5]
- They must have the name and address of the vendor and the wording “6.25 Percent Mass. Sales Tax on Meals” with a space opposite this statement for insertion of the amount of the tax. [5]
- If the state and local tax are combined, the sales check should describe that line as “state and local tax” or the menu should have a note saying that the state tax of 6.25% and local tax of .75% totaling 7% are added to the total price of the meals. [5]
- Returns may also be audited for up to 6 years for understating by more than 25% the tax that should have been reported on the return. [5]
- Thepenalty for late paymentis 1% of the unpaid tax shown on the return per month , up to a maximum of 25%. [5]
- Thepenalty for failing to file a return by the due dateis 1% of the balance due per month , up to a maximum of 25%. [5]
- If you fail to pay the tax when due, you’ll also be charged interest at the federal short term rate plus 4%, compounded daily. [5]
- The average gross tax gap was estimated at $441 billion per year based on data from those three years. [6]
- After late payments and enforcement efforts were factored in, the net tax gap was estimated at $381 billion. [6]
- The tax gap estimates translate to about 83.6%, of taxes paid voluntarily and on time, which is in line with recent levels. [6]
- The new estimate is essentially unchanged from a revised Tax Year 2008 2010 estimate of 83.8%. [6]
- After enforcement efforts are taken into account, the estimated share of taxes eventually paid is 85.8% for both periods. [6]
- And it is line with the TY 2001 estimate of 83.7% and the TY 2006 estimate of 82.3%. [6]
- The average annual tax gap for 2008 2010 is estimated to be $458 billion, compared to $450 billion for tax year 2006. [6]
- The voluntary compliance rate is now estimated at 81.7 percent compared to the prior estimated rate of 83.1 percent. [6]
- After accounting for enforcement and late payments, the net compliance rate is 83.7 percent. [6]
- These estimates represent the first full update of the report in five years; the update showed that the nation’s compliance rate was essentially unchanged at about 83 percent from the review covering tax year 2001. [6]
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Reference
- ourworldindata – https://ourworldindata.org/taxation.
- taxfoundation – https://taxfoundation.org/tampon-taxes-sales-tax/.
- taxfoundation – https://taxfoundation.org/publications/state-and-local-sales-tax-rates/.
- home – https://home.kpmg/us/en/home/insights/2024/02/tnf-ireland-potential-vat-compliance-changes.html.
- europa – https://ec.europa.eu/eurostat/statistics-explained/index.php/Tax_revenue_statistics.
- mass – https://www.mass.gov/guides/sales-tax-on-meals.
- irs – https://www.irs.gov/newsroom/the-tax-gap.
How Useful is Sales Tax and Vat Compliance
Sales tax is typically imposed by state and local governments in the United States on retail transactions of tangible goods and some services. The tax is collected by the seller at the point of sale and then remitted to the appropriate government entity. VAT, on the other hand, is a broader-based tax that is applied at each stage of the production and distribution chain. Unlike sales tax, VAT is ultimately borne by the end consumer, who pays the tax on the final price of the goods or services.
Regardless of the specific tax system in place, compliance is essential for maintaining the integrity of the tax system and ensuring that tax revenues are collected fairly and efficiently. Non-compliance can lead to significant revenue losses for governments, which can have a negative impact on public services and infrastructure.
From a business perspective, compliance with sales tax and VAT regulations can also help to build trust and credibility with customers and suppliers. Customers are more likely to do business with a company that is transparent in its tax practices and demonstrates a commitment to compliance. Suppliers may also be more willing to offer favorable terms to businesses that have a reputation for being in good standing with tax authorities.
Ensuring compliance with sales tax and VAT regulations can be a complex and time-consuming process, especially for businesses that operate in multiple jurisdictions or countries. Companies must be diligent in tracking and reporting their taxable sales, purchases, and liabilities to avoid fines, penalties, and legal consequences. Automation tools and software can help streamline the compliance process and reduce the risk of errors and omissions.
While compliance with sales tax and VAT regulations can seem daunting at times, it is a necessary part of doing business in today’s global economy. Businesses that take the time to understand and implement best practices in tax compliance will be better positioned to succeed and grow in the long run. By investing in compliance efforts, companies can help ensure a level playing field for all businesses, promote economic growth, and contribute to the overall well-being of society.
In conclusion, sales tax and VAT compliance play a vital role in the functioning of modern economies. Businesses that prioritize compliance with tax regulations can gain a competitive advantage, build trust with customers and suppliers, and contribute to the overall stability of the tax system. It is essential that businesses take the time to understand and implement best practices in tax compliance to ensure their long-term success and sustainability.
In Conclusion
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