Essay on Sales Taxation

Introduction

The city of the American town faced a budget shortfall last year, and this has caused its development of more revenue for the growth of its economy. They are now ready to correct the situation through imposing of a sales tax on the consumption of the middle and lower class people who have a higher likelihood of shopping at the redeveloped mall which offers goods and services at a lower price (Bush, 1995). The sales tax is a good move for the city of the American town. This move is good because it will help create a platform through which the city can raise more revenue to correct the budget shortfall and plan better for the next fiscal year.

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The move has higher chances of working because the redeveloped mall used to be a previous shopping mall for the poor and middle class and therefore its redevelopment is likely to attract more customers and increase its sales. Also, poor people are more attracted to products which are cheap as well as more convenient to their vicinity. In this case, the mall is located in the downtown, and this enables it to be more accessible by the middle and low-class people than the wealthy (Ring Jr, 1999). The rich or rather high-class people live in better residential areas, and this means they cannot access the mall's products. Therefore, sales tax will only help generate more revenue because more middle and lower class people will have the convenience of shopping at the mall and this is likely to raise the sales to a higher level.

Also, the government made a right decision of targeting the poor to help with the strategy of raising the revenue that is required to fix the budget shortfall that was experienced last year. The poor are in a better position of increasing their purchase of the products at the mall for two significant reasons. These are for the fact that the mall has cheaper products and the second is that it is at a strategic location whereby they are likely to access it at no extra cost at all (Due, 1957). These two reasons, therefore, act as motivating factors to help the poor increase their purchase and thus improve the government to raise more revenue. However, sales tax is the best means of raising the extra income required by the government, and therefore it means that it is the most appropriate method to be imposed. Sales tax entails a consumption tax which is imposed at the point of sale of goods and services as a means of raising more revenue.

Sales tax will also be required because it promotes an easier way of raising revenue through taxing the standard products that people buy (Bruce & Fox, 2000). This move means that whenever a customer buys a good or a service, they will make a payment which has a specific percentage to cater for the revenue which is required for the development of the economy.

Conclusion

In conclusion, sales tax of the consumption rate of the middle and lower classes will enable the government to raise more funds in the form of revenue and use them to correct the budget shortfall that it faced in last year. This process will mean that it will acquire more income to serve as the fix solution of the current fiscal year and this reflects a successful year for the city of the American town regarding growth and development of the economy.

References

Bruce, D., & Fox, W. F. (2000). "E-commerce in the Context of declining State Sales Tax Bases." National Tax Journal, 1373-1388.

Bush, S. (1995). "Sales Taxation: State and Local Structure and Administration." Spectrum 68, no. 3 (1995): 53.Due, J. F. (1957). "Sales Taxation." University of Illinois Press.

Ring Jr, R. J. (1999). "Consumers' share and Producers' Share of the General Sales Tax." National Tax Journal, 79-90.