What would happen if there was no sales tax?

[jatin]

I’ve been thinking about the impact of no sales tax in a country. How would it affect businesses, consumers, and government revenue? Would prices be significantly lower, and how would governments fund public services without sales tax? I’d love to hear your thoughts on the pros and cons.

 

[niyati]

Without sales tax people would probably buy goods and services at lower price since the sales tax would not be added to the price. Nonetheless, governments would miss a big pot to fill in, and those effects may have an impact on the state of affairs of people such as education, healthcare and construction. Other taxes could be raised by businesses or governments may seek other ways to make funding, like raising income or property taxes. The overall effect would simply rely on the adjustment and adaption made by the governments to fill in the missing revenue.

 

[Jarwish]

Without sales tax, consumers would be able to pay less on goods and services and would hopefully spend their money to produce more economic activity. But the government would lose considerable revenues, being spent on issues, such as education, healthcare, and infrastructure. This may result into budget deficits, less services or increased taxes in other places. Also, no sales tax means more inequality in terms of income distribution as richer people are likely to spend more and pay more in terms of sales tax.

 

[Gsusangrey]

Without sales tax, governments would lose a major revenue source, potentially leading to budget cuts in public services or higher income/property taxes. Consumers might enjoy lower prices, but essential services could suffer.