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Why the Sales Taxation of Services Should Be Allowed

Everybody is familiar with the term sale tax that is added to the services as well as goods that are purchased at the retail stores. The sales tax is calculated as the percentage of the sales price collected from the purchaser at the time of sale and the paid to the state tax agency on a monthly or a weekly basis. The amount of revenue that is generated with the help of the sales tax depends a lot on the percentage that is deduced from the sale as well as the tax base. It has been noticed that the sales tax is not levied on many of the services and even many of the products that are considered to be essential or vital like the food and the medicine.

Many of the public economists have been urging the authorities to include more of the services within the ambit of sales tax.

Some of the reasons as to why the sales taxation of service is essential are:

  1. Substantial sales tax revenue can be generated by taxing the services: It has been estimated that by the sales taxation of services that are household except the education, healthcare, and housing can generate a lot of revenue for the sale tax funds
  1. In order to have the long run adequacy of the sales tax revenue it is essential to have sales taxation on services: It has been observed that there has been a sharp increase in the amount of services that are taken by the households and a decrease in the purchase of goods by the house holds. The tax authorities have increased the tax rates but nevertheless they have been still not able to do generate the amount that they could have generated had they included more services in the sales tax.
There are many other reasons that require the sales taxation of services. Over the decades the patterns of purchasing by the house holds have changed dramatically. It thus makes sense that the tax authorities also change the way and tenor of sales taxation to increase the sales tax revenue.