>>Perhaps you would care to elaborate? If there are two shops selling
>>the same item in near proximity and one charges higher prices
>>(because of sales tax) then, all things being equal, why would
>>customers not simply take their business to the shop with the lower
>>prices?
>
>That's what they do. In Arkansas, they drive over the state line to
>Oklahoma to buy cars without paying sales tax--or did, till the
>sales tax was capped at a $2500 purchase, so the rich and poor alike
>paid about the same sales tax on a car, whether a ten-year-old work
>transport or a nice new Hummer.
However there is a "Use Tax" in Arkansas, which is actually a tax payable by consumers at the same rate as the sales tax payable by retailers.
http://www.arkansas.gov/dfa/taxes/salestax/usetax.htm
"Use Tax is a tax on tangible personal property purchased
out-of-state and brought into Arkansas for use, storage, consumption,
or distribution. The tax is designed to assure fair competition
between Arkansas businesses and out-of-state businesses."
I would concede that the "Use Tax" is a tax on consumers. Unlike Sales Tax, which is of course a tax on retailers. However it appears consumers ignore the tax en-masse and probably aren't even aware of it.
All the same, it is a tax on consumers. I was wrong to claim there is no such tax in the US, there is. At least there is on paper, although the tax in largely unenforceable. Arkansas authorities must be particularly incompetent if they can't even enforce the tax on new vehicles, which must presumably be registered in Akansas before they can be used. (It should be feasible to check to see if sales tax was paid on the purchase at the time a new vehicle was registered and enforce the "Use Tax" if sales tax was not paid.)
So there we have it. Retailers pay Sales Tax, consumers refuse to pay Use Tax. A Case study in why taxes are not levied on consumers - they won't pay them. ;-)
Bill Bartlett Bracknell Tas