Minor Differences: City Tax

Sales taxes are much more prominent in the United States. Here’s a little video on the matter:

In the UK, the sales tax, called VAT, is 20% on nearly all categories of goods (cue shocked expressions). Because prices on the shelf are displayed including this, I barely noticed it. Here in the US, I’m constantly reminded every time I buy anything – the advertised price is rarely the amount you must pay.

The UK can partly get away with this tax perception filter because it effectively operates as a single state (with some minor devolution-based adjustments) with a unified sales tax regime. As far as I can tell, the UK doesn’t grant any sales tax raising powers to lower levels of government i.e city or county. In the US, cities and counties, as well as states, can add their own sales taxes to an item:

Coming soon: Federal Tax, Earth Tax, Galaxy Tax, and Universe Tax.

Coming soon: Federal Tax, Earth Tax, Galaxy Tax, and Universe Tax.

These three layers vary considerably across geographic areas. It’s sometimes cheaper to cross a border or drive out of town to buy products. It also means that it’s just simpler to advertise products without tax because the price of an item can vary even among branches of a very localised chain of stores.

I’m not sure which system is better but I think it does make a difference to how aware I am of sales taxes.

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