what are the disadvantages of sales taxSolutionsales taxes a

what are the disadvantages of sales tax

Solution

sales taxes are only charged to the end user of a good or service. Because the majority of goods in modern economies pass through a number of stages of manufacturing, often handled by different entities, a significant amount of documentation is necessary to prove who is ultimately liable for sales tax.
Disadvantage of sales tax-
1)Relatively high tax:

While most items would be taxed at a stable level, some items may be taxed at a higher price. For example, alcohol and cigarettes may be taxed at a higher price than other items to discourage the purchase.

2)Manufacturing cost:

Since the tax on each item would be relatively high, the manufacturing companies would also have to pay more money to purchase their raw materials, thus increasing their manufacturing costs.

3)It would create systems of double taxation.

This tax-advantaged account is funded with post-tax dollars. Upon retirement, when distributions are taken from the fund and used to purchase items, that post-tax money would then be fully taxed a second time with the presence of a national sales tax. That would reduce the value of all retirement accounts and potentially encourage households to look at other options.

4). It could cause a mortgage crisis.

A national sales tax would eliminate all of the advantages that come with home ownership under the current system. There is a good chance that this could cause home prices to drop dramatically because there would no longer be a market for a home.