Free Elements of Sales Taxation Essay Sample

Taxation is an important component of any state; in the United States, it is an important component involving the government and citizens. In some cases, its complex structure of bases and the differing level of administration and jurisdiction can be confusing. Tax administration is administered primarily in the three levels of governments, and the taxation types and levels comparisons are usually emphasized on the state level. The State of Illinois has embraced three tax rate structures. These are adopted for simplicity and ease of documentation; they include taxes on qualifying food, drug and medical appliances, items requiring registrations, such as, motor vehicles, and finally general merchandise.

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The sales taxes follow the routes of Service taxes and Commodity taxes. These are then classified into four elements: The Use Tax, Retailer's occupational tax, Service Occupational tax, and Service Use tax. The Use Tax is imposed on commodities bought without the sales tax, such as, goods bought from a different state. These goods pose a challenge in tax administration since their sizes are small. The Retailers occupational taxes are levied on persons engaging in sale of property to buyers of consumables.

Each state has its unique way of administering taxes. Different states adopt different modes of tax administration systems; however, there are states that have similar tax administration systems. All states impose taxes on their citizens; states are dependent on taxes for their public programs to run effectively. In fact, imposition of taxes and increase in tax levies is more significant with increasing deficits. General sales taxes are taxes with a single rate imposed levy with respect to a broad range of good items i.e. commodities for consumption and services. In the case of general sales taxes, all States levy general sales taxes in exception of Alaska, New Hampshire, Delaware, Montana, and Oregon.

It is significant to note that, though these states may not levy statewide general sales taxes, some of their counties and municipalities have enough mandates to administer general sales taxes. For example, in Alaska counties collect Borough taxes and Municipalities taxes up to the level of 7.5 percent. Each state in the United States has its unique economic and social needs; thus, all the States administer some level of Selective taxes to meet their needs. These special forms of taxes include taxes on motor fuels, alcoholic beverages, insurance premiums, and the tobacco product taxes, which are levied in Montana.

In Illinois, several commodities are tax exempt. This permission from nonpayment of tax is based on the commodity type, and the type or nature of the organization tax exemptions is to be offered. Here, an organization must be qualified by Illinois Department of Revenue and issued a unique approved sales tax exemption number so that they can be allowed to make tax-free purchases from businesses. These organizations include exclusive charitable, religious, or educational centers. State, Federal, Local governments, county fair organizations and certain senior citizens are also included in this category.

Commodities exempted from taxation include sales to the State, Federal, and Local governments, sales to nonprofit organizations, sales of newspapers and magazines, and sale of machinery and equipment that will be used for the assembly of property meant for retail or wholesale. Sales of legal tenders, medallions, and fuel used for international flights are also considered. Furthermore, qualified purchases on personal property to be used in assembly and manufacturing purposes, and qualified sales on private property that will be converted to real estate or property eligible for exemptions are allowed.  

Service Tax can be easily confused for Service Occupational Tax; however, the latter is measured on the value of tangible property transferred simply as a means of offering services. For example, the values of stationery used and transferred to a buyer of a service like photocopying and scanning. However, the value of the service itself is not taxed in Illinois. Therefore, services are not subject to taxation hence they do not fit the frame nominal tax rates and brackets.

Illinois does not provide sales tax credit to improve purchases; however, there are prepaid sales taxes that are claimed by fuel distributors on motor fuel to a seller who is not licensed by the state as a distributor or a supplier. Contrary, the State provides other kinds of tax credits either to woo investors or improve welfare to a certain social group. These tax credits include the homebuyer tax credit for retired soldiers.

There are several excise taxes levied due to either a social or an economic aim. They includeCigarette & Cigarette Use Taxes, Liquor Tax, Electricity Excise Tax, and Gas Tax among others. Because of their diversity, the base of their taxation is also varied. However, these lists of selective taxes heavily bend toward the base of consumption. This is mainly influenced by the behavioral change the State desire to acquire. The rates applied in the application of these taxes are varied, and the common criterion does not lean towards a standard percentage as usually expressed the rates of these taxes are normally expressed as an amount of a certain quantity.

In conclusion, all the states are different in the issues of taxation; however, despite the differences, it is critical to note that all states must run, and they must run effectively. Therefore, in one way or another, each state must find its revenue tracks through taxes. Understanding state dynamics about their taxes, and how taxation affects the people, is a valuable lesson to avoid the misjudged tax issues.


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