Function

• Sales tax is a tax or fee collected by a seller of an item, product or service at the time of sale. The amount is recorded and then it is sent in to the Bureau of Taxation of the state that the business operates in. Sales tax is charged only once on an item. The money that is collected goes into the state's revenue. The funds are needed to pay for goods, services and government operations. Sales tax monies help maintain public parks, bridges, parking lots and sidewalks. The funds are needed to supplement property tax and at one time provided more funding than the municipal taxes do now.
  
  

History

• Sales tax charges date back to 2000 BC Egypt. The tax was charged on cooking oil and other commodities and used to help fund the needs of the governing entities. The Romans carried the act of charging tax on purchased items to Europe. Spain put a national sales tax in place in the 1340s that carried through to the eighteenth century. The Pennsylvania Mercantile License Tax in 1821 led the way for commodity taxes to be widely used in the United States during the Civil War period. Thirty of the continental states had sales taxes imposed between the 1930s and 1940s. Sales tax has been the highest source of state funding revenue up until the late 1990s when property tax monies rose above that income.
  
  

Identification

• A business must have a resellers certificate through the state where they do business in. Chain stores must have resellers certificates in each state and are expected to charge the mandated tax for the individual states. Businesses that sell to the public and have a resellers certificate will be able to purchase from wholesalers. When buying items or supplies from a wholesaler the business does not pay a sales tax. The sale is tax exempt because the business will be reselling the items to the public. The stores will file reports with the states that they do business with and pay in the taxes collected.
  
  

Considerations

• The amount of tax charged state by state varies. The tax is figured as a percentage of the amount of purchased items. The reliance on sales tax differs state to state also. In some states the municipalities are allowed to charge their own form of sales tax on the local level. The Sales Tax Commission of the individual state determines what projects the revenue will be used for.
  
  

Potential

• Sales tax can be used to benefit education, community needs and health care. States today levy additional sales taxes for the sale of tobacco and alcohol products. These revenues have helped fund drug education and drug law enforcement. It also funds tobacco education and violence reduction. Wine sales tax helps pay for grape and wine research. Sales tax provides relief for the 'poor' funds, pensions, local governments and administration costs.