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Posted by sonny 03/27/2009 @ 07:23

Tags : taxes, finance

News headlines
Golisano moves to Fla., fed up with NY tax structure -
Thomas Golisano, the two-time gubernatorial candidate, has had it with New York state's tax burden and is making Florida his permanent residence. Golisano, the billionaire owner of the Buffalo Sabres, made the disclosure Thursday in his native...
'Survivor' champ/tax evader Richard Hatch out of jail -
By Zap2it "Survivor" winner Richard Hatch, aka The Naked Guy, is out of jail after serving four years for tax evasion, reports Hatch, 48, was sentenced to 51 months in prison in January 2006 for failing to pay taxes on his $1 million...
Tax Revenue Fell 20% in April - Washington Post
The state's tax revenue plummeted last month as a result of rising unemployment, a dip in sales taxes and a high number of individual refunds. Revenue for April -- a crucial month for collections -- was down almost 20 percent from 2008....
Capital plan includes video poker, liquor taxes - Chicago Tribune
By CHRISTOPHER WILLS | AP Writer SPRINGFIELD, Ill. - Illinois liquor taxes would rise and gambling on video poker would be legalized as part of a plan to pay for a roughly $26 billion public works program, key lawmakers said Friday....
State legislators consider tax cuts for small businesses - Dallas Morning News
By ROBERT T. GARRETT / The Dallas Morning News AUSTIN — On today's deadline for Texas businesses to pay franchise tax, a bipartisan group of lawmakers pleaded for more small businesses to be exempted. And they predicted lawmakers still will be...
Calif. voters ready to join tax revolt - USA Today
By David McNew, Getty Images By William M. Welch, USA TODAY LOS ANGELES — Three months after California seemingly averted a state budget meltdown, voters are being asked to ratify billions of dollars in higher taxes that were part of the deal....
Government doesn't want to give us control - Dayton Daily News
By 2030, those programs will require 50 percent of tax revenues. The Congressional Budget Office states that by around 2050, middle-income folks will see two-thirds of their income go to taxes. There are solutions: let the free market go to work in...
Stroger says unpaid income taxes due to cash withdrawal - Chicago Tribune
Cook County Board President Todd Stroger said today that he failed to pay nearly $12000 in federal taxes because he took money out of a deferred compensation plan and didn't have enough cash to pay the extra taxes on the additional income....
Convicted Home Depot exec's ex-wife guilty of tax fraud -
Melissa Deaton Tesvich, the ex-wife of a Home Depot executive who last year pleaded guilty to fraud, has pleaded guilty to one count of filing a false tax return. On May 22, 2006, Tesvich and her former husband, Anthony Tesvich, filed a joint federal...
Higher Cigarette Tax Effective Today - Jackson Free Press
Mississippi smokers will pay about 8.5 cents in combined state and federal excise taxes on every cigarette they buy, starting today. After a protracted battle between Mississippi Gov. Haley Barbour, the state Legislature and lobbyists, taxes on a pack...

Sales taxes in the United States

Sales taxes in the United States are taxes added onto the price of goods or services that are purchased in the United States. A sales tax is a tax on consumption, which is displayed as a percentage of the sale price. Sales taxes are assessed by every state except Alaska, Delaware, Montana, New Hampshire and Oregon. Hawaii has a similar tax although it is charged to businesses instead of consumers. In some cases, sales taxes are also assessed at the county or municipal level.

The sales tax is the responsibility of the merchant to collect and remand to the state, and stated separately (or implicitly added at the time of sale) to consumers. Usually only consumers are charged the tax; resellers are exempt if they do not make use of the goods. In some jurisdictions, a reseller's certificate is required to make use of this privilege. This is in contrast to a Value Added Tax (VAT), where resellers are also taxed (resellers may then claim the VAT paid on their purchases from the applicable authority). States which have exemptions for specific types of organizations (such as schools), may also require a certificate. A sales tax audit is the examination of a company’s financial documents by the state’s tax agency to verify if they have collected the correct amount of sales tax from their customers.

The Constitution of the United States limits the power of the states to subjects within their jurisdiction. Jurisdiction over interstate commerce is reserved to the federal government. Nevertheless, a resident of a state with a sales tax who purchases goods from a place with no sales tax (or at a lower rate) might be subject to pay a "use tax" (often at the same rate as the state sales tax) for non-exempt purchases (see also tax-free shopping). While there is no national sales tax in the United States, the Fair Tax Act, which would replace federal income taxes with a sales tax and monthly rebate, has attracted interest in the United States Congress and the 2008 presidential campaign.

In 1921, West Virginia became the first US state to enact a sales tax . Georgia passed legislation enacting a sales tax in 1929. 11 other states enacted sales taxes in 1933 alone. By 1940, at least 30 states had a sales tax. Currently, 45 of the 50 U.S. States levy a sales and use tax against purchases.

Alabama has a state general sales tax of 4%, plus any additional local taxes which can amount to a combined total sales tax of up to 10% in some cities such as Montgomery. Alabama is one of several states that do not exempt food from state taxes.

There is no state sales tax in Alaska; however, local governments (boroughs and their municipalities) may levy up to 7%, and 108 of them do so. Municipal sales taxes are collected in addition to borough sales taxes, if any. Regulations and exemptions vary widely across the state. Anchorage and Fairbanks do not charge a local sales tax.

Arizona has a transaction privilege tax (TPT) that differs from a "true" sales tax in that the tax is levied on the gross receipts of the vendor and is not a liability of the consumer. (As explained in Arizona Administrative Code rule R15-5-2202, vendors are permitted to pass the amount of the tax on to the consumer, but remain the liable parties for the tax to the state.) TPT is imposed under sixteen tax classifications (as of November 1, 2006), with the tax rate most commonly encountered by Arizona consumers (e.g., for retail transactions) set at 5.6%. The current tax as of 2009 is 6.1%, though cities and counties can add as much as 6% to the total rate. Food for home consumption and prescription drugs (including legend drugs and certain prescribed homeopathic medication) are two of many items of tangible personal property that are statutorily exempt from the retail TPT. Arizona's TPT is one of the few excise taxes in the country imposed on contracting activities rather than sales of construction materials.

Arkansas has a state sales tax of 6%, plus any additional local taxes.

Effective July 1, 2007, Arkansas state sales tax on unprepared food (groceries) reduced to 3%. Local sales taxes on groceries remained unchanged.

On April 1, 2009 the state sales and use tax will increase by 1% as a result of the 2008-2009 California budget crisis. The minimum sales tax statewide will be 8.25%.

Supplementary sales tax may be added (with voter approval) by cities, counties, service authorities, and various special districts (such as the Bay Area Rapid Transit district). The effect is that sales tax rates vary from 7.25% (in areas where no additional taxes are charged) to 8.75% (for example, in the city of Avalon, on Santa Catalina Island, in National City, and in Alameda County). On Oct. 1, 2008, the city of South Gate increased their sales-tax rate to 9.25%, the highest in California.

The last changes to the published local tax rates took effect on April 1, 2007. Official updates are published on the Board of Equalization website and also in Publication 71.

In general, sales tax is required on all purchases of tangible personal property to its ultimate consumer. Services are not subject to sales tax (but may be subject to other taxes).

Vehicle purchases are taxed based on the city and county in which the purchaser registers the vehicle, and not on the county in which the vehicle is purchased. There is therefore no advantage in purchasing a car in a cheaper county to save on sales tax (a one-percent difference in sales tax rate would otherwise result in an additional $300 loss on a $30,000 car).

In grocery stores, unprepared food items are not taxed but vitamins and all other items are. Ready-to-eat hot foods, whether sold by supermarkets or other vendors, are taxed. Restaurant bills are taxed. As an exception, hot beverages and bakery items are tax-exempt if and only if they are for take-out and are not sold with any other hot food. If consumed on the seller's premises, such items are taxed like restaurant meals. All other food is exempt from sales tax.

Also excluded are food animals (livestock), food plants and seeds, fertilizer used to grow food, prescription drugs and certain medical supplies, energy utilities, certain alternative energy devices and supplies, art for display by public agencies, and veterans' pins. There are many specific exemptions for various veterans', non-profit, educational, religious, and youth organizations. Sale of items to certain out-of-state or national entities (mostly transportation companies) is exempt, as are some goods sold while in transit through California to a foreign destination.

Occasional or one-time sales not part of a regular business are exempt, except that sales of three or more non-food animals (puppies, kittens, etc.) per year are taxed.

There are also exemptions for numerous specific products, from telephone lines and poles, to liquid petroleum gas for farm machinery, to coins, to public transit vehicles. There are partial exemptions for such varied items as racehorse breeding stock, teleproduction service equipment, farm machinery, and timber-harvesting equipment. For an organized list of exemptions, with estimates for how much revenue the state loses and the people saves for each, see Publication 61 of the Board of Equalization.

Sales tax is charged on gasoline. The tax is levied on both the gasoline and on the federal and state excise taxes, resulting in double taxation. The sales tax is included in the metered price at the pump. The California excise tax on gasoline is 18 cents a gallon.

Motor vehicle gasoline and jet fuel are subject to special taxation regimes. In 2005, there was a political dispute in the San Francisco Bay Area about whether revenues for jet fuel should be credited to San Mateo County (where San Francisco International Airport is physically located), the City and County of San Francisco, which owns the airport, or Alameda County, where Oakland International Airport is located. (The distinction is largely point of delivery vs. point of negotiation for the sale.) This is controlled by Regulation 1802, which has other provisions about businesses which have multiple locations.

Critics of the current sales tax regime charge that it gives local governments an incentive to promote commercial development (through zoning and other regulations) over residential development, including the use of eminent domain condemnation proceedings to transfer real estate to higher sales tax generating businesses.

Colorado's state sales tax is 2.9% with some cities and counties levying additional taxes. Denver's tangibles tax is 3.62%, with food eaten away from the home being taxed at 4%. There is also a football stadium tax, mass transit tax, and scientific and cultural facilities tax. Most transactions in Denver and the surrounding area are taxed at a total of about 8%. Colorado does not charge sales tax on unprepared food (groceries).

Connecticut has a 6% sales tax, with no additional local taxes. Most non-prepared food products are exempt, as are most prescription and nonprescription medications, all internet services, all magazine and newspaper subscriptions, and textbooks (for college students only). Most clothing costing less than $50 per item is also exempt; items costing more than $50 are charged sales tax on the entire price.

Shipping and delivery charges (including charges for U.S. postage) made by a retailer to a customer are subject to sales and use taxes when provided in connection with the sales of taxable tangible personal property or services. The tax applies even if the charges are separately stated and applies regardless of whether the shipping or delivery is provided by the seller or by a third party. No tax is due on shipping and delivery charges in connection with any sale that is not subject to sales or use tax. Shipping or delivery charges related to sales for resale or sales of exempt items are not taxable. Likewise, charges for mailing or delivery services are not subject to tax if they are made in connection with the sale of nontaxable services.

Delaware does not assess a sales tax on consumers. The state does, however, impose a tax on the gross receipts of most businesses. Business and occupational license tax rates range from 0.096 percent to 1.92 percent, depending upon the category of business activity.

Washington, D.C. has a sales tax rate of 5.75%. The tax is imposed on sale of tangible personal property and selected services. A 9% tax is imposed on liquor sold for off premises consumption, 10% on restaurant meals and rental cars, 12% on parking, and 14% on hotel accommodations. Groceries, prescription and non-prescription drugs, and residential utilities services are exempt from the District's sales tax.

The District has two sales tax holidays each year, one during "back-to-school" and one preceding the holiday shopping season.

Florida has a general sales tax rate of 6%. The tax is imposed on the sale or rental of goods, the sale of admissions, the lease, license, or rental of real property, the lease or rental of transient living accommodations, and the sale of a limited number of services such as commercial pest control, commercial cleaning, and certain protection services. There are a variety of exemptions from the tax, including groceries and prescriptions.

A "discretionary sales surtax" may be imposed by the counties of up to 1.5%, charged at the rate of the destination county (if shipped). This is 1% in most counties, 0.5% in many, 1.5% in very few, and 0.25% in one county. A few have none at all. Most have an expiration date, but a few do not. Only the first $5,000 of a large purchase is subject to the surtax rate. Most counties levy the surtax for education or transportation improvements.

There are annual sales tax holidays, such as a back-to-school holiday on clothing, books, and school supplies under a certain price, as well as a new one in June 2007 to promote hurricane preparedness. The 2008 Legislators did not enact any sales tax holidays.

Florida also permits counties to raise a "tourist development tax" of up to an additional 6% on hotel rooms.

Georgia has a 4% state sales tax rate. Groceries are exempt from the state sales tax, but still subject to tax by the local sales tax rate. Counties may impose local sales tax of 1%, 2%, or 3%, consisting of up to three 1% local-option sales taxes (out of a set of five) as permitted by Georgia law. These include a SPLOST, a homestead exemption (HOST), and one for public schools which can be put forth for a referendum by the school board instead of the county commission (in cooperation with its city councils). Also, the city of Atlanta imposes an additional 1% municipal-option sales tax (MOST), as allowed by special legislation of the Georgia General Assembly, solely for the purpose of fixing its water and sewerage systems.

As of July 2008, total sales tax rates in Georgia are 3% for groceries and 7% for other items in the vast majority of its 159 counties. A few counties charge only 2% local tax (6% total on non-grocery items), and four partially exempt groceries from the local tax by charging 2% on food, and 3% (7% total) on other items. Fulton and DeKalb counties charge 1% for MARTA, and adjacent metro Atlanta counties may do so by referendum if they so choose. For the portions of Fulton and DeKalb within the city of Atlanta, the total is at 8% (4% on groceries) due to the MOST.

Similar to Florida and certain other states, Georgia has two sales tax holidays per year. One is for back-to-school sales the first weekend in August, but sometimes starting at the end of July. A second usually occurs in October, for energy-efficient appliances with the Energy Star certification.

Georgia has many exemptions available to specific businesses and industries. To identify potential exemptions, businesses and consumers must research the laws and rules for sales and use tax and review current exemption forms.

Hawaii does not have a sales tax, but it does have an excise tax which applies to nearly every conceivable type of transaction (including services), and is technically charged to the business rather than the consumer. Unlike other states, rent, medical services and perishable foods are subject to the excise tax. Also, unlike other states, businesses may or may not show the tax separately on the receipt, as it is technically part of the selling price. 4.0% is charged at retail with an additional 0.5% surcharge in the City and County of Honolulu (for a total of 4.5% on Oahu sales), and 0.5% is charged on wholesale . However the state also allows "tax on tax" to be charged, which effectively means a customer is billed 4.166% (4.712% on Oahu). The exact dollar or percentage amount to be added must be quoted to customers within or along with the price. The 0.5% surcharge on Oahu was implemented to fund the new rail transport system. The use of an excise tax means that tax-exempt non-profit organizations must pay the tax, unlike states where they are exempt from sales taxes.

Idaho has a 6.0% state sales tax. Some localities levy an additional local sales tax.

Illinois' sales and use tax scheme includes four major divisions. Retailers' Occupation Tax, Use Tax, Service Occupation Tax and the Service Use Tax. Each of these taxes is administered by the Illinois Department of Revenue. The Retailers' Occupation Tax is imposed upon persons engaged in the business of selling tangible personal property to purchasers for use or consumption. It is measured by the gross receipts of the retailer. The base rate of 6.25% is broken down as follows: 5% State, 1% City, 0.25% County. Local governments may impose additional tax resulting in a combined rate that ranges from the State minimum of 6.25% to a current high of 11.50% in certain business districts in Cook County.. A complementary Use Tax is imposed upon the privilege of using or consuming property purchased anywhere at retail from a retailer. Illinois registered retailers are authorized to collect the Use Tax from their customers and use it to offset their obligations under the Retailers' Occupation Tax Act. Since the Use Tax rate is equivalent to the corresponding Retailers' Occupation Tax rate, the amount collected by the retailer matches the amount the retailer must submit to the Illinois Department of Revenue. The combination of these two taxes is what is commonly referred to as "sales tax". If the purchaser does not pay the Use Tax directly to a retailer (for instance, on an item purchased from an Internet seller), they must remit it directly to the Illinois Department of Revenue.

The Service Occupation Tax is imposed upon the privilege of engaging in service businesses and is measured by the selling price of tangible personal property transferred as an incident to providing a service. The Service Use Tax is imposed upon the privilege of using or consuming tangible personal property transferred as an incident to the provision of a service. An example would be a printer of business cards. The printer owes Service Occupation Tax on the value of the paper and ink transferred to the customer in the form of printed business cards. The serviceperson may satisfy this tax by paying Use Tax to his supplier of paper and ink or, alternatively, may charge Service Use Tax to the purchaser of the business cards and remit the amount collected as Service Occupation Tax on the serviceperson's tax return. The service itself, however, is not subject to tax.

Qualifying food, drugs, medicines and medical appliances have sales tax of 1% plus local home rule tax depending on the location where purchased. Newspapers and magazines are exempt from sales tax as are legal tender, currency, medallions, bullion or gold or silver coinage issued by the State of Illinois, the government of the United States of America, or the government of any foreign country.

Illinois' system is exceptionally complicated. A brief overview is detailed on the Illinois Department of Revenue website.

The city of Chicago has the highest total sales tax of all major U.S. cities. It is also one of the most complex. 10.25% is levied on all non-perishable goods purchased, while 2% is levied on qualifying food, drugs, medicines and medical appliances. The Illinois Department of Revenue collects a 3% Chicago Soft Drink Tax and a 1% Metropolitan Pier and Exposition Authority (MPEA) "Food and Beverage Tax", on prepared food and beverage purchases in the downtown area (These "downtown" boundaries are: Surf Street on the north, Ashland Avenue on the west, Stevenson Expressway (I-55) on the south, & Lake Michigan on the east. Furthermore, O'Hare and Midway airports also fall under the 1% MPEA tax district). In addition, the Chicago Department of Revenue collects additional sales taxes on items such as fountain drinks, bottled water, liquor, and cigarettes.

Indiana has a 7% state sales tax. The tax rate was raised from 6% on April 1, 2008, to offset the loss of revenue from the statewide property tax reform, which is expected to significantly lower property taxes. Untaxed retail items include medications, water, ice and unprepared, raw staple foods or fruit juices. Many localities, inclusive of either counties or cities, in the state of Indiana also have a sales tax on restaurant food and beverages consumed in the restaurant or purchased to go. Revenues are usually used for economic development and tourism projects. This additional tax rate may be 1% or 2% or other amounts depending on the county in which the business is located. For example, in Marion County, Indiana, the sales tax for restaurants is 9%. There is an additional 2% tax on restaurant sales in Marion County to pay for the Lucas Oil stadium.

As of July 1, 2008, Iowa has a 6% state sales tax. Most counties impose local option sales taxes of up to 1% each, bringing the total up to 7%. There is no tax on most unprepared food, excluding corn. The Iowa Department of Revenue provides information about local option sales taxes, including sales tax rate lookup.

Kansas has a 5.3% state sales tax. More than 700 jurisdictions within the state (cities, counties, and special districts) may impose additional taxes. For example, in the capital city of Topeka, retailers must collect 5.3% for the state, 1.15% for Shawnee County, and 1% for the city, for a total rate of 7.45%. As of February 2007, the highest rate was 8.65%, in the Roeland Park Transportation District.

Kentucky has a 6% state sales tax. Alcohol (until April 1, 2009) and most staple grocery foods are exempt.

Louisiana has a 4% state sales tax: 3.97% to sales tax and .03% to Louisiana tourism district. There are also taxes on the parish (county) level and some on the city levels. Parishes may add local taxes up to 5%, while local jurisdictions within parishes may add more. Louisiana also bids out sales tax audits to private companies, with many being paid on a percentage collected basis.

Orleans Parish collects the maximum 5% tax rate for a total of 9% on general purpose items.

Maine has a 5% general, service provider and use tax. The tax on lodging and prepared food is 7% and short term auto rental is 10%. These are all generally known as "sales tax".

Maryland has a 6% state sales and use tax as of January 3, 2008 (it was 5% before this), with exceptions for medicine, residential energy, and most non-prepared foods. Currently, many services (e.g., auto repair labor, haircuts, accounting) are not taxed. With this tax increase, Maryland added sales tax on Internet purchases and other mail items such as magazine subscriptions. Clothing is also taxable.

Certain computer services were to be subject to sales tax and use tax effective July 1, 2008 after being approved without public hearing during the 2007 Special Legislative Session. However, after effective lobbying by computer services professionals, the tax was repealed April 6 during the final days of the General Assembly. Following declining approval ratings and intense public pressure, Governor Martin O'Malley relented and authorized the repeal.

Massachusetts has a 5% sales tax, replete with numerous exceptions including (among other things): "food products" (but excluding prepared meals); residential water, gas, electric services; returnable containers, clothing and footwear up to $175 (for clothing over $175, tax is due only on the amount over $175 per item); prescription medicines, prostheses and medical appliances or services; publications for use in education or religious worship; poultry and livestock, as well as their feed; fruit and vegetable stock for generating food for humans; tools, machinery, parts, etc., for use in agriculture; cloth or other materials used for making clothing; residential heat pump, solar or wind power system; items purchasable with federal food stamps; the American Flag; etc. An enacted change in 2006 taxes computer software that is downloaded for use in Massachusetts, whereas previously this was viewed as a non-taxable "service".

Every year since 2004, the State Government has enacted tax holidays suspending the sales tax on purchases for one weekend in August. Motor vehicles, motorboats, meals, telecommunications services, gas, steam, electricity, tobacco products, and any single item with a price exceeding $2,500 were excluded from the holiday.

Michigan has a 6% sales tax. Michigan has a use tax of 6%, which is a tax that is applied to items brought into Michigan but not bought there, and on rentals in some situations, and is supposed to be paid when filing income tax. A service tax was approved in September 2007, effective December 1, 2007, allowing certain services to be taxed. The services tax was repealed the same day it went into effect. There is no local sales tax in Michigan. Food, periodicals, and prescription drugs are not taxed. Restaurants, however, do have a tax, but the tax is for the service and not on the food. Michigan also has recently introduced a business tax called the Michigan Business Tax (MBT) which replaces the Single Business Tax (SBT).

Minnesota currently has a 6.5% state sales tax. A statewide referendum passed on Nov. 4, 2008 which will add 3/8 of 1 percent, bringing the total to 6.875%. The new rate will go into effect on July 1, 2009. As of July 1, 2008, an additional 0.25% Transit Improvement tax was phased in across five counties in the Minneapolis-St. Paul metropolitan area for transit development. These counties include Hennepin, Ramsey, Anoka, Dakota, Washington. The Transit Improvement tax brings taxes in these counties to 7.125%. Saint Paul imposes an additional 0.5% tax, bringing the total to 7.625%. An additional 0.15% is imposed in Hennepin County to finance a new Minnesota Twins stadium, in addition to 0.5% imposed in Minneapolis, bringing the total rate in the city of Minneapolis to 7.775% and 7.275% in the rest of Hennepin County. Food (not including prepared food, some beverages such as soda pop, and other items such as candy) and clothing are exempt from the sales tax. Prescription drugs are also exempt. Municipalities may be allowed by the state legislature to institute local option taxes. Rochester imposes a 0.5% for a total of 7.375% sales tax. Current local option taxes include a "lodging" tax in Duluth (3%), Minneapolis (3%), and Rochester (4%), as well as served "food and beverage" tax in Duluth (2.25%). An additional 1% sales tax is imposed in Duluth, bringing the total to 7.875%. Alcohol has a 9% sales tax statewide (6.5% sales tax, plus 2.5% gross receipts tax) not including any applicable local taxes. In addition to the local 1% sales tax added to Duluth sales, Duluth imposes an additional 2.25% tax on all food, beverage and alcohol sales at restaurants.

Mississippi has a 7% state sales tax. Cities and towns may implement an additional tourism tax on restaurant and hotel sales. The city of Tupelo has a 0.25% tax in addition to other taxes. Restaurant and fast food tax is 9%. The city of Hattiesburg also has a 9% sales tax on Restaurant and fast food tax.

Missouri has a 4.225% state sales & use tax rate. The state sales tax rate on certain foods is 1.225%. Counties, cities, and special taxing districts may impose additional sales & use taxes.

Transportation Development Districts and Museum Districts may impose sales tax (but not use tax) up to 1%, in addition to all other sales taxes. However, the Missouri Department of Revenue does not administer sales tax for these districts, nor does it publish their sales tax rates. As of August 2007, there is no public, comprehensive and complete list of these districts, their locations, and the sales tax rates they impose.

Montana does not have a state sales tax but some municipalities which are big tourist destinations, such as Whitefish, Red Lodge, Big Sky, and West Yellowstone, have a small sales tax (0.25%).

Nebraska has a 5.5% state sales tax. Municipalities have the option of imposing an additional sales tax of up to 1.5%. Specific tax rates per counties are available on the web.

Nevada's state sales tax rate is 6.5 percent. Counties may impose additional rates via voter approval or through approval of the Legislature; therefore, the applicable sales tax varies by county from 6.5 percent to 7.75 percent (in Clark County), as of October 1, 2007. Clark County, which includes Las Vegas, imposes four separate county option taxes in addition to the statewide rate - 0.25 percent for flood control, 0.50 percent for mass transit, 0.25 to fund the Southern Nevada Water Authority, and 0.25 percent for the addition of police officers in that county. In Washoe County (which includes Reno), the sales tax rate is 7.375 percent, due to county option rates for flood control, the ReTRAC train trench project, mass transit, and an additional county rate approved under the Local Government Tax Act of 1991.

For travelers to Las Vegas, note that the lodging tax rate in unincorporated Clark County, which includes the Las Vegas Strip, is 9%. Within the boundaries of the City of Las Vegas, the lodging tax rate is 11%.

New Hampshire is one of only five states that do not impose any form of general sales tax on the sale or use of tangible personal property within the state. New Hampshire does, however, levy a tax on meals, room occupancies, motor vehicle rentals, and use of electricity (55 cents per megawatt-hour) and phone services (7 percent). A transfer tax is levied on real estate sales, currently 0.15 percent.

In New Hampshire, any food or beverage that is prepared and served by a "restaurant," whether served for consumption on or off the restaurant premises, is considered to be a meal. Excluded from the tax is any food and beverage that is wholly packaged off the premises and sold in the original package, such as chips, candy, soda or fruit beverages in sealed containers, and frozen novelties. Catered or delivered meals or party platters are taxable, as are charges for any service or items related to preparing or serving the food (plates, ovens, etc). Restaurants include most places where you can buy any food. There are several other exceptions. For example, meals served or furnished on the premises of a religious or charitable nonprofit organization are not taxable, nor are bakery products sold in quantity of 6 or more servings, or a whole pie, cake, or loaf of bread with multiple servings.

The New Hampshire meals and rooms tax rate is 8% on any amount over 35 cents (including any alcohol served on premise). The rooms tax is imposed on any occupancy in a hotel, house, apartment, dormitory, camp, cottage or any similar establishment offering sleeping accommodations in the State of New Hampshire, for any rental less than 185 days, not including bare campsites without shelter. The tax rate is currently 8% of the rent for each occupancy. A motor vehicle rental tax is imposed under the meals and room tax classification at a rate of 8% on the gross rental receipts of each rental, but not including separately itemized fuel, insurance or damage charges.

Gasoline tax is 20.6¢ per gallon. Cigarettes: $1.08 per pack. Beer: 30¢ per gallon.

A full list of Urban Enterprise Zones is available on the State of New Jersey Web site.

New Jersey does not charge sales tax on gasoline, but gasoline is subject to a $0.145/gallon excise tax.

Sales of clothing and accessories that are made of fur from the hide or pelt of an animal that is valued at $500 or more are subject to a 6% Fur Clothing Gross Receipts Tax.

The state of New Mexico does not have a sales tax. It instead has a statewide gross receipts tax of 5%, with municipalities assessing an additional gross receipts tax. The gross receipts tax rate is between 5.125% and 8.4375% throughout the state . In New Mexico's gross receipts tax, all receipts from sales of goods or service within the state are taxed (with the exception of food for offsite consumption, such as grocery store sales).

The state does not prohibit retailers from collecting this tax directly from the consumer, so the gross receipts tax is commonly just passed on from the retailer to the consumer as if it were a sales tax.

New York has a 4% state sales tax. All counties and some cities add local taxes ranging from 3% to 4.75%. The combined sales tax in Utica, New York, for example, is 8.75%. In New York City, total sales tax is 8.375%, which includes 0.375% charged for the service of the Metropolitan Transportation Authority.

There is no New York City sales tax imposed on the purchase of clothing and footwear regardless of the amount. As of September 1, 2007, New York State has eliminated sales tax on all clothing and shoes if the single item is priced under $110. Most counties and cities have not eliminated their local sales taxes on clothing and shoes. There are however, 11 counties and 5 cities (most notably New York City, New York, Queens, Kings, Richmond, and Bronx, which make up New York City are not counted)) that have done so. The counties where the year-round exemption will apply include: Chautauqua, Chenango, Columbia, Delaware, Dutchess, Greene, Hamilton, Madison (outside the City of Oneida), Rensselaer, Tioga, Broome, and Wayne. The cities where the year-round exemption will apply include: Gloversville, New York City, Norwich, Olean, Binghamton, and Sherrill. New York also exempts college textbooks from sales tax.

As of June 1, 2008, when products are purchased online and shipped within New York State, the retailer must charge the tax amount appropriate to the locality where the goods are shipped, and in addition, must also charge the appropriate tax on the cost of shipping and handling.

North Carolina has a state-levied sales tax of 4.5%, effective October 1, 2008, with most counties adding an additional 2.5% tax, for a total tax of 7%. Mecklenburg County levies an additional 0.5% tax, which is directed towards funding the light rail system, for a total of 7.5%.

There is a 30.2¢ tax per gallon on gas, a 35¢ tax per pack of cigarettes, a 79¢ tax per gallon on wine, and a 53¢ tax per gallon on beer. Most non-prepared food purchases are taxed at a reduced rate of 2%. Candy, soft drinks, and prepared foods are taxed at the full combined 7% rate, with some counties levying an additional 1% tax on prepared foods. In order to benefit back-to-school shoppers, there is a sales tax holiday that exempts certain items of tangible personal property sold between the first Friday in August and the following Sunday.

Ohio has a 5.5% state sales tax. Counties may levy a permissive sales tax of from 1/4% up to 2.5% and transit authorities, mass transit districts usually centered on one primary county, may levy a sales tax of from 1/4% up to 2.5%. Cuyahoga county has the highest sales tax of 7.75%. Tax increments may not be less than 1/4%, and the total tax rate, including the state rate, may not exceed 8.5%. County permissive taxes may be levied by emergency resolution of the county boards of commissioners. Transit authority taxes must and county permissive taxes may be levied by a vote of the electors of the district or county. Shipping and handling charges are considered part of the retail price and are also taxable. Ohio also has a gross receipts tax called the Commercial Activity Tax (CAT) that is applicable only to businesses but shares some similarities to a sales tax. "Food for human consumption off the premises where sold" is exempt from sales tax.

Oklahoma has a 4.5% sales tax rate. Cities have an additional sales tax which varies, but is generally 3-4% resulting in a total sales tax rate of 7.5% to 8.5%.

Oregon has no statewide sales tax, although local municipalities may impose sales taxes if they so choose. The city of Ashland, for example, charges a 5% sales tax on prepared food. Several Oregon communities assess sales taxes on lodging.

Pennsylvania has a 6% sales tax rate. Allegheny County and Philadelphia County have an additional 1% sales tax.

Food, most clothing, and footwear are among the items most frequently exempted. However, taxed food items include soft drinks and powdered mixes, sports drinks, hot beverages, hot prepared foods, sandwiches, and salad bar meals, unless these items are purchased with food stamps. Additionally, catering and delivery fees are taxed if the food itself is taxed.

Additional exemptions include internet service, newspapers, textbooks, disposable diapers, feminine hygiene products, toilet paper, wet wipes, prescription drugs, many over-the-counter drugs and supplies, oral hygiene items (including toothbrushes and toothpaste), contact lenses and eyeglasses, health club and tanning booth fees, burial items (like coffins, urns, and headstones), personal protective equipment for production personnel, work uniforms, veterinary services, pet medications, fuel for residential use (including coal, firewood, fuel oil, natural gas, steam, and electricity), many farming supplies and equipment, and ice.

Puerto Rico has a 5.5% commonwealth sales tax that applies to both products and services with few exemptions (including items such as unprocessed foods, prescription medicines and business-to-business services). Additionally, most municipalities have a city sales tax of 1.5% for a total of 7%. Some items that are exempt from commonwealth sales tax, specifically unprocessed foods, may still be subject to the city sales tax in the municipalities.

Rhode Island has a state sales tax of 7%. The rate was raised from 1% to 6% as a temporary measure in the 1970s, but has not since been lowered.

Rhode Island raised its sales tax from 6% to 7% in the early 1990s to pay for the bailout of the state's failed credit unions. The change was initially proposed as a temporary measure, but was later made permanent.

Other taxes may also apply, such as the state's 1% restaurant tax.

Many items are exempt from the state sales tax, e.g., food, prescription drugs, clothing and footwear, newspapers, coffins, and original artwork.

South Carolina has a 6% state sales tax, as of June 1, 2007 (7% for accommodations), but counties and some cities may impose an additional 1% or 2% sales tax. As of mid-2005, 35 of 46 counties do so. Restaurants may also charge an extra 1-2% tax on prepared food (fast food or take-out) in some places. The state's sales tax on unprepared food disappeared completely November 1, 2007. There is a cap of $300 on sales tax for most vehicles.

Additionally, signs posted in many places of business inform that South Carolina residents over the age of 85 are entitled to a 1% reduction in sales tax.

South Dakota has a 4% state sales tax, plus any additional local taxes. An additional 1% sales tax is added during the summer season on sales occurring in tourism-related businesses and dedicated to the state's office of tourism.

Tennessee charges 5.5% sales tax on groceries as of January 1, 2008, and 7% on other items. Counties also tax up to 2.75% in increments of 0.25% — most do so around 2.25%. If a county does not charge the maximum, its cities can charge and keep all or part of the remainder. Several cities are in more than one county, but none charge a city tax, thus paying only the county taxes.

The Texas state sales and use tax rate is 6.25%, but local taxing jurisdictions (cities, counties, special purpose districts, and transit authorities) may also impose sales and use taxes up to 2% for a total of 8.25%. Medicine, produce, eggs, meats, bakery products, and others are exempt from tax. In May 2006, Texas imposed a 1% tax on the gross receipts of businesses (retailers pay a .5 percent rate), but exempts sole proprietorships and general partnerships.

If merchants file and pay their sales & use tax on time, they may subtract 1/2 percent of the tax collected as a discount, to encourage prompt payment and to compensate the merchant for collecting the tax from consumers for the state.

Utah has a 4.75% state sales tax. Additionally, local taxing authorities can impose their own sales tax. Currently the majority of Utah's aggregate sales taxes are in the range of 5.5% - 7.0%.

Vermont has a 6% sales tax.

Virginia has a general sales tax rate of 5% (4% state tax and 1% local tax). Consumers are taxed on every 'eligible food item.' For example, fresh local produce sold at farmers markets and grocery stores, or basic, unprepared cold grocery foods, are taxed 2.5% (1.5% state tax and 1% local tax). Cities and counties may also charge an additional "Food and Beverage Tax" on restaurant meals.

Virginia's use tax also applies at the same rate for out of state purchases (food 2.5%, non-food 5%)exceeding $100 per year. Various exemptions include prescription and non-prescription medicine, gasoline , and postage stamps, or the labor portion of vehicle repair (parts portion only, citation needed). "Cost price" does not include separately stated shipping or delivery charges but it does include a "shipping and handling" charge if listed as a combined item on the sales invoice. However, unlike Maryland and West Virginia consumer use tax forms, the Virginia CU-7 Consumer Use Tax Form does not recognize that it is possible to be under-taxed in another state and so only addresses untaxed items only. Unlike Maryland's quarterly filing, Virginia's CU-7 is due annually between January 1 and May 1 or can be filed optionally instead with Schedule A with Form 760, or Schedule NPY with Form 760PY. As with all states, Virginia has penalties and interest for non-filing, but Virginia's use tax is no more practically enforceable than that of any other state.

Washington has a 6.5% statewide sales tax. As of October 31, 2007, sales tax is not applied on most food items and prescription medications (not including over-the-counter medications). Individual counties, municipalities and regional transit authorities are entitled to collect a sales tax, which vary from 0.5% to 2.5%. Within King County, the King County Food & Beverage (KCF&B) tax adds an additional .5% to food and beverages purchased in bars, taverns and restaurants resulting in an effective tax rate of 9.5% (9.0% on all other items). Additionally, the sale or lease of motor vehicles for use on the road incur an additional 0.3% tax, rental of a car for less than 30 days has an additional state/local tax of 8.9%. When renting a car for less than 30 days in Seattle, the total sales tax is 18.6%. When purchasing an automobile, if you trade in a car, the state subtracts the price of the trade when calculating the sales tax to be paid on the automobile (e.g., purchasing a $40,000 car and trading a $20,000 car, you would be taxed on the difference of $20,000 only, not the full amount of the new vehicle).

When staying at hotel (60+ rooms capacity) in Seattle, the sales tax is 15.6%. Residents of Canada and US states or possessions (only US and Canadian locations having a sales tax of less than 3%, e.g., Oregon, Alaska & Alberta) are exempt from sales tax on purchases of tangible personal property for use outside the state. Stores at the border will inquire about residency and exempt qualified purchasers from the tax. Washington also has a Gross receipts tax called the Business and Occupations Tax (B&O).

Also, the seller of a house pays excise taxes on the full sale price. The amount of the varies by county. In King and Snohomish counties, it is up to 1.78%. For example, selling a house for $500K will cost you $8900 in taxes.

Residents of Washington are also obligated to pay a sales and use tax, which is incurred when a resident makes a purchase in another state and uses it within state lines, regardless of whether or not sales tax was paid in another state. This tax is based on an honor system for its residents and is seldom, if ever, paid.

The lowest combined sales tax (statewide and municipality) in Washington is 7.0% in most of Klickitat and Skamania Counties, while the highest combined sales tax in Washington is the aforementioned 9.5% tax on prepared food and beverages in King County.

April 1, 2008 saw tax increases in King County (+.001), Kittitas County (+.003), Mason County (+.001), and the city of Union Gap (+.002).

On July 1, 2008, Washington stopped charging an origin-based sales tax, and started charging a destination-based sales tax. This change only applies to transactions beginning and ending within state lines and does not apply to other states. Additionally, Washington started collecting taxes from online retailers that have voluntarily agreed to start collecting the sales tax in return for not being sued for back taxes.

The city of Seattle charges a 7.5% tax on charges for parking garages to go toward mass transit.

On November 4, 2008, voters in King County (Seattle) approved a 0.5% increase in the sales tax. Taxes within the city will increase to 9.5% on retail purchases. This increase was supposed to be effective Jan. 1, 2009 but has been pushed back until April. For the first quarter of 2009 the tax rate in Seattle is 9%.

West Virginia has the distinction of being the first US state to enact a sales tax. It currently stands at 6%. The sales tax on food currently stands at 3%. Effective January 1, 2006, the sales tax on food was lowered to 5%, and on July 1, 2007, it was lowered further to 4%. The sales tax on food was again lowered to 3% on July 1, 2008. However, the reduced rate of tax does not apply to sales, purchases and uses by consumers of prepared food. Prescription drugs are not subject to sales tax. Credit is allowed for sales or use taxes paid to another state with respect to the purchase.

An individual who titles a motor vehicle with the West Virginia Division of Motor Vehicles must pay a $5.00 title fee and a 5 percent title privilege tax (rather than the 6 percent sales tax). For vehicles purchased new by West Virginia residents, the measure of this tax is the net sales price of the vehicle. For used vehicles, and for vehicles previously titled in other states, the tax is measured by the National Automobile Dealers Association book value of the vehicle at the time of registration. No credit is issued for any taxes paid to another state. Trailers, motorboats, all-terrain vehicles and snowmobiles are also subject to this tax. As of June 7, 2007, new residents of West Virginia no longer have to pay the 5 percent title privilege tax on vehicles, as long as the vehicles were validly titled to the same owner outside the state.

Wisconsin has a 5% state sales tax, with most of the 72 counties charging an extra 0.5% "County Tax". Five counties (Milwaukee, Ozaukee, Racine, Washington, Waukesha) have a 0.1% tax for purchases over $10 that funds the building of Miller Park in Milwaukee. Brown County (Green Bay) has a 0.5% tax for purchases over $10 which funds the reconstruction of Lambeau Field. Prescriptions, most non-prepared foods (including meat and dairy), and newspapers are exempt; however over-the-counter medications are not.

Wyoming has a 4% state sales tax, with counties adding an additional 0% to 2%, resulting in a maximum rate of 6%. In addition, resort district areas have the option to impose an additional 1% tax. Food for domestic home consumption is exempt from sales tax.

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United Kingdom corporation tax

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Corporation tax is a tax levied in the United Kingdom on the profits made by companies and on the profits of permanent establishments of non-UK resident companies and associations that trade in the EU. Prior to the tax's enactment on 1 April 1965, companies and individuals paid the same income tax, with an additional profits tax levied on companies. The Finance Act 1965 replaced this structure for companies and associations with a single corporate tax, which borrowed its basic structure and rules from the income tax system. Since 1997, the UK's Tax Law Rewrite project has been modernising the UK's tax legislation, starting with income tax, while the legislation imposing corporation tax has itself been amended; the rules governing income tax and corporation tax have thus diverged. Corporation tax is governed by the Income and Corporation Taxes Act 1988 (as amended).

Originally introduced as a classical tax system, in which companies were subject to tax on their profits and companies' shareholders were also liable to income tax on the dividends that they received, the first major amendment to corporation tax saw it move to an imputation system in 1973, under which an individual receiving a dividend became entitled to an income tax credit representing the corporation tax already paid by the company paying the dividend. The classical system was reintroduced in 1999, with the abolition of advance corporation tax and of repayable dividend tax credits. Another change saw the single main rate of tax split into three. Tax competition between jurisdictions has reduced the main rate to 30%, and the main rate is planned to reduce to 28% from April 2008.

The UK government has faced problems with its corporate tax structure, including European Court of Justice judgements that aspects of it are incompatible with European Union treaties. Tax avoidance schemes marketed by the financial sector have also proven an irritant, and been countered by complicated anti-avoidance legislation.

The complexity of the corporation tax system is a recognised issue. The Labour government, supported by the Opposition parties, has expressed its commitment to wide-scale reform. The tax has slowly been integrating generally accepted accounting practice, with the corporation tax system in various specific areas based directly on the accounting treatment. Corporation tax is the next area scheduled to be tackled by the Tax Law Rewrite project, with a draft Bill due.

The tax system in the United Kingdom holds "capital" and "revenue" as distinct forms of income and expenditure. Neither term is formally defined; capital implies financial items that will have an enduring benefit, while revenue implies an ongoing or recurrent item, relating to something likely to be used for short period. For example, expenditure by a company on acquiring a new head office, and the proceeds realised on the disposal of the old head office, are capital; expenditure on stationery, and income from the sale of trading stock, are revenue. Some items that are capital for one company may be revenue for another: expenditure on acquiring a new head office could be a revenue item for a company whose business is building new office blocks.

Before 1965, companies were subject to income tax on their profits, at the same rate as was levied on individuals. An imputation system existed, whereby the income tax paid by a company was offset against the income tax liability of a shareholder who received dividends from the company. With the standard rate of income tax in 1949 at 50%, a company making £1,000 in profits would pay £500 in tax. If the company then chose to pay a £100 dividend, the recipient would be treated as if he had earned £200 and had paid £100 in income tax on it — the tax paid by the company fully covered the tax due from the individual on the dividend paid. If, however, the individual was subject to tax at a higher rate (known as "surtax"), he (not the company) would be liable to pay the additional tax.

In addition to income tax, companies were also subject to a profits tax, introduced by Labour Chancellor Sir Stafford Cripps, which was deducted from company profits when determining the income tax liability. It was a differential tax, with a higher tax rate on dividends (profits distributed to shareholders) than on profits retained within the company. By penalising the distribution of profits, it was hoped companies would retain profits for investment, which was considered a priority after the Second World War. The tax did not have the desired effect, so swingeing increases were introduced in the rates of the distributed profits tax by the post-war Labour government, in an attempt to coerce companies into retaining more of their profits. At the time of Hugh Gaitskell's 1951 budget, the profits tax was 50% for distributed profits and 10% for undistributed profits.

A series of reductions in the profits tax were brought in from 1951 onwards by the new Conservative government. The tax rates fell to 22.5% on distributed profits and 2.5% on undistributed profits by 1957, although the profits tax was no longer income tax-deductible. Derick Heathcoat-Amory's Budget of March 1958 replaced the differential profits tax with a single profits tax measure, applicable to both retained and distributed profits. This gradual decrease, and final abolition, of taxes on capital distributions reflected ideological differences between the Conservative and Labour parties: the Conservative approach was to distribute profits to capital holders for investment elsewhere, while Labour sought to force companies to retain profits for reinvestment in the company in the hope this would benefit the company's workforce.

Under the Labour Chancellor of the Exchequer James Callaghan, the Finance Act 1965 replaced the system of income tax and profits tax from 1 April 1965 with a single measure, the Corporation Tax, which re-introduced aspects of the old system. Corporation Tax was charged at a uniform rate on all profits, but additional tax was then payable if profits were distributed as a dividend to shareholders. In effect, profits suffered double taxation. This method of corporation tax is known as the classical system and is similar to that used in the United States. The effect of the tax was to revert to the distribution tax in operation from 1949 to 1959: dividend payments were subject to higher tax than profits retained within the company.

The Finance Act 1965 also introduced capital gains tax, at a rate of 30%. This was a tax charged on the gains arising on the disposal of capital assets by individuals. While companies were exempted from capital gains tax, they were liable to corporation tax on their "chargeable gains", which were calculated in the same way as individuals' capital gains. The tax applied to company shares as well as other assets. Before 1965, capital gains were not taxed, and it was advantageous for taxpayers to argue that a receipt was non-taxable "capital" rather than taxable "revenue".

The basic structure of the tax, where company profits were taxed as profits, and dividend payments were then taxed as income, remained unchanged until 1973, when a partial imputation system was introduced for dividend payments. Unlike the previous imputation system, the tax credit to the shareholder was less than the corporation tax paid (corporation tax was higher than the standard rate of income tax, but the imputation, or set-off, was only of standard rate tax). When companies made distributions, they also paid advance corporation tax (known as ACT), which could be set off against the main corporation tax charge, subject to certain limits (the full amount of ACT paid could not be recovered if significantly large amounts of profits were distributed). Individuals and companies who received a dividend from a UK company received a tax credit representing the ACT paid. Individuals could set off the tax credit against their income tax liability.

On introduction, ACT was set at 30% of the gross dividend (the actual amount paid plus the tax credit). If a company made a £70 dividend payment to an individual, the company would pay £30 of advance corporation tax. The shareholder would receive the £70 cash payment, plus a tax credit of £30; thus, the individual would be deemed to have earned £100, and to have already paid tax of £30 on it. The ACT paid by the company would be deductible against its final "mainstream" corporation tax bill. To the extent that the individual's tax on the dividend was less than the tax credit - for example, if his income was too low to pay tax (below £595 in 1973–1974) - he would be able to reclaim some or all of the £30 tax paid by the company. The set-off was only partial, since the company would pay 52% tax (small companies had lower rates, but still higher than the ACT rate), and thus the £70 received by the individual actually represented pre-tax profits of £145.83. Accordingly, only part of the double taxation was relieved.

ACT was not payable on dividends from one UK company to another (unless the payor company elected to pay it). Also, the recipient company was not taxed on that dividend receipt, except for dealers in shares and life assurance companies in respect of some of their profits. As the payor company would have suffered tax on the payments it made, the company that received the dividend also received a credit that it could use to reduce the amount of ACT it itself paid, or, in certain cases, apply to have the tax credit repaid to them.

The level of ACT was linked to the basic rate of income tax between 1973 and 1993. The March 1993 Budget of Norman Lamont cut the ACT rate and tax credit to 22.5% from April 1993, and 20% from April 1994. These changes were accompanied with a cut of income tax on dividends to 20%, while the basic rate of income tax remained at 25%. Persons liable for tax were lightly affected by the change, because income tax liability was still balanced by the tax credit received, although higher rate tax payers paid an additional 25% tax on the amount of the dividend actually received (net), as against 20% before the change.

The change had bigger effects on pensions and non-taxpayers. A pension fund receiving a £1.2 m dividend income prior to the change would have been able to reclaim £400,000 in tax, giving a total income of £1.6 m. After the change, only £300,000 was reclaimable, reducing income to £1.5 m, a fall of 6.25%.

Gordon Brown's summer Budget of 1997 ended the ability of pension funds and other tax-exempt companies to reclaim tax credits with immediate effect, and for individuals from April 1999. This stealth tax rise has been blamed for the poor state of British pension provision, with critics such as Member of Parliament Frank Field describing it as a "hammer blow" and the Sunday Times describing it as a swindle, with the hypothetical £1.5 m income described above falling to £1.2 m, a fall in income of 20%, because no tax would be reclaimable.

From 6 April 1999 ACT was abolished, and the tax credit on dividends was reduced to 10%. There was a matching reduction in the basic income tax rate on dividends to 10%, while a new higher-rate of 32.5% was introduced. While non-taxpayers were no longer able to claim this amount from the treasury (as opposed to taxpayers who could deduct it from their tax bill), the 20% ACT (which would have previously been deducted from the dividend before payment) was no longer levied.

ACT that had been incurred prior to 1999 could still be set off against a company's tax liability, provided it would have been able to set it off under the old imputation system. In order to keep the stream of payments associated with advance corporation tax payment, 'large' companies (comprising the majority of corporation tax receipts) were subjected to a quarterly instalments scheme for tax payment.

On its introduction in 1965, corporation tax was charged at 40%, rising to 45% in the 1969 Budget. The rate then fell to 42.5% in the second Budget of 1970 and 40% in 1971. In 1973, alongside the introduction of advance corporation tax (ACT), Conservative chancellor Anthony Barber created a main rate of 52%, together with a smaller companies' rate of 42%. This apparent increase was negated by the fact that under the ACT scheme, dividends were no longer subject to income tax.

The 1979 Conservative Budget of Geoffrey Howe cut the small companies' rate to 40%, followed by a further cut in the 1982 Budget to 38%. The Budgets of 1983–1988 saw sharp cuts in both main and small companies' rates, falling to 35% and 25% respectively. Budgets between 1988 and 2001 brought further falls to a 30% main rate and 19% small companies' rates. From April 1983 to March 1997 the small companies' rate was pegged to the basic rate of income tax. During the 1980s there was briefly a higher rate of tax imposed for capital profits.

Chancellor Gordon Brown's 1999 Budget introduced a 10% starting rate for profits from £0 to £10,000, effective from April 2000. Marginal relief applied meaning companies with profits of between £10,000 and £50,000 paid a rate between the starting rate and the small companies' rate (19% in 2000).

The 2002 Budget cut the starting rate to zero, with marginal relief applying in the same way. This caused a vast surge in incorporations, as businesses that had operated as self employed, paying income tax on profits from just over £5000, were attracted to the corporation tax rate of 0% on income up to £10,000. Previously self-employed individuals could now distribute profits as dividend payments rather than salaries. For companies with profits under £50,000 the corporation tax rate varied between 0% and 19%. Because dividend payments come with a basic rate tax credit, provided the recipient did not earn more than the basic rate allowance, no further tax would be paid. The number of new companies being formed in 2002–2003 reached 325,900, an increase of 45% on 2001–2002.

The fact that individuals operating in this manner could potentially pay no tax at all was felt by the government to be unfair tax avoidance, and the 2004 Budget introduced a Non-Corporate Distribution Rate. This ensured that where a company paid below the small companies' rate (19% in 2004), dividend payments made to non-corporates (for example, individuals, trusts and personal representatives of deceased persons) would be subject to additional corporation tax, bringing the corporation tax paid up to 19%. For example, a company making £10,000 profit, and making a £6,000 dividend distribution to an individual and £4,000 to another company would pay 19% corporation tax on the £6,000. Although this measure substantially reduced the number of small businesses incorporating, the Chancellor in the 2006 Budget said tax avoidance by small businesses through incorporation was still a major issue, and scrapped the starting rate entirely.

The starting point for computing taxable profits is profits before tax (except for a life assurance company). The rules for calculating corporation tax generally ran in parallel with income tax until 1993, when the first statutory rule to move profit reporting into line with generally accepted accounting practice was introduced, although the courts were already moving towards requiring trading profits to be computed using general accountancy rules.

The Finance Act 1993 introduced rules to make tax on exchange gains and losses mimic their treatment in a company's financial statements in most instances. The Finance Act 1994 saw similar rules for financial instruments, and in the Finance Act 1996 the treatment of most loan relationships was also brought into line with the accounting treatment. The Finance Act 1997 saw something similar with rental premiums. A year later, the Finance Act 1998 went even further, making it clear that taxable trading profits (apart from those accruing to a Lloyd's corporate name or to a life assurance company) and profits from a rental business are equal to profits calculated under generally accepted accounting practice ("GAAP") unless there is a specific statutory or case law rule to the contrary. This was followed up by the Finance Act 2004, which ruled that where a company with investment business could make deductions for management expenses, they were calculated by reference to figures in the financial statements.

From 2005, all European Union listed companies have to prepare their financial statements using the "International Financial Reporting Standards" ("IFRSs"), as modified by the EU. Other UK companies may choose to adopt IFRSs. Corporation tax law is changing so that, in the future, IFRSs accounting profits are largely respected. The exception is for certain financial instruments and certain other measures to prevent tax arbitrage between companies applying IFRSs and companies applying UK GAAP.

Tax avoidance is the legitimate reduction of tax through tax planning and/or usage of legal provisions. Unlike most other countries, most UK tax professionals are accountants rather than lawyers by training. The main promoters of tax avoidance schemes are the large accountancy and law firms, and large financial services groups, who market tax-efficient investments.

There has never been a general anti-avoidance rule ("GAAR") for corporation tax. However, it inherited an anti-avoidance rule from income tax relating to transactions in securities, and since then has had various "mini-GAARs" added to it. The best known "mini-GAAR" prevents a deduction for interest paid when the loan to which it relates is made for an "unallowable purpose".

The Finance Act 2004 introduced disclosure rules requiring promoters of certain tax avoidance schemes that are financing- or employment-related to disclose the scheme. Taxpayers who use these schemes must also disclose their use when they submit their tax returns. This is the first provision of its kind in the UK, and the Finance Act 2005 has shown a number of tax avoidance schemes being blocked earlier than would have been expected prior to the disclosure rules.

Recently, the Government has sought to raise more revenues from corporation tax. In 2002 it introduced a separate 10% supplementary charge on profits from oil and gas extraction businesses, and the Finance Act 2005 contained measures to accelerate when oil and gas extraction business have to pay tax. Instead of paying their tax in four equal instalments in the seventh, tenth, thirteenth and sixteenth month after the accounting period starts, they will be required to consolidate their third and fourth payments and pay them in the thirteenth month, creating a cash flow advantage for the Government. The Finance (No.2) Act 2005 continued measures specifically relating to life assurance companies. When originally announced (as the Finance (No.3) Bill 2005) Legal & General told the Stock Exchange that £300 m had been wiped off their value, and Aviva (Norwich Union) announced that the tax changes would cost its policy holders £150 m.

Corporation tax must be passed annually by Parliament, otherwise there is no authority to collect it. The charge for the financial year (beginning 1 April each year) was imposed by the Finance Act passed in that calendar year. The Finance Act 1998 changed this, imposing the charge for the 1998 and 1999 financial years, with the Finance Act 1999 then imposing the charge for the 2000 financial year, and so on. The tax is charged in respect of the company's accounting period, which is normally the 12-month period for which the company prepares its accounts. Corporation tax is administered by Her Majesty's Revenue and Customs (HMRC), which was formed from a merger of the Inland Revenue (which previously administered corporation tax) and Her Majesty's Customs and Excise on 18 April 2005.

Corporation tax is levied on the net profits of a company. Except for certain life assurance companies, it is borne by the company as a direct tax.

Up until 1999 no corporation tax was due unless HM Revenue & Customs (HMRC) raised an assessment on a company. Companies were, however, obliged to report certain details to HMRC so that the right amount could be assessed. This changed for accounting periods ending on or after 1 July 1999, when self-assessment was introduced. Self-assessment means that companies are required to assess themselves and take full responsibility for that assessment. If the self-assessment is wrong through negligence or recklessness, the company can be liable to penalties. The self-assessment tax return needs to be delivered to HMRC 12 months after the end of the period of account in which the accounting period falls (although the tax must be paid before this date). If a company fails to submit a return by then, it is liable to penalties. HMRC may then issue a determination of the tax payable, which cannot be appealed — however, in practice they wait until a further six months have elapsed. Also, the most common claims and elections that may be made by a company have to be part of its tax return, with a time limit of two years after the end of the accounting period. This means that a company submitting its return more than one year late suffers not only from the late filing penalties, but also from the inability to make these claims and elections.

From 2004 there has been a requirement for new companies to notify HM Revenue & Customs of their formation, although HMRC receives notifications of new company registrations from Companies House. Companies will then receive an annual notice CT603, approximately 1–2 months after the end of the company's financial period, notifying it to complete an annual return. This must also include the company's annual accounts, and possibly other documents, such as auditors' reports, that are required for certain companies.

Most direct expenses are deductible when calculating taxable income and chargeable gains. Notable exceptions include any costs of entertaining clients. Companies with investment business may deduct certain indirect expenses known as "expenses of management" when calculating their taxable profits. A similar relief is available for expenses of a life assurance company taxed on the I minus E basis which relate to the company's basic life assurance and general annuity business. Donations made to charities are also normally deducted in calculating taxable income.

The 2007 Budget announced a main rate cut from 30% to 28%, effective from April 2008. At the same time, the small companies' rate was increased from 19% to 20% from April 2007, 21% in April 2008, and 22% in April 2009, to stop "individuals artificially incorporating as small companies to avoid paying their due share of tax, a practise if left unaddressed would cost the rest of the taxpaying population billions of pounds".

The rate of corporation tax is determined by the financial year, which runs from 1 April to the following 31 March. Financial year FY05 started on 1 April 2005 and will end on 31 March 2006. Where a company's accounting period straddles a financial year in which the corporation tax rate has changed, the company's profits for that period are split. For example, a company paying small companies' rate with its accounting period running from 1 January to 31 December, and making £100,000 of profit in 2007, would be deemed to have made 90/365*£100,000 = £24,657.53 in FY06 (there are 90 days between January 1 and March 31), and 275/365*£100,000=£75,34.47 in FY07, and would pay 19% on the FY06 portion, and 20% on the FY07 portion.

Most companies are required to pay tax nine months and a day after the end of an accounting period. Larger companies are required to pay quarterly instalments, in the seventh, tenth, thirteenth and sixteenth months after a full accounting period starts. These times are modified where an accounting period lasts for less than twelve months. From 2005 onwards, for tax payable on oil and gas extraction profits, the third and fourth quarterly instalments are merged, including the supplementary 10% charge.

In the financial year 2004–2005, approximately 39,000 companies paid corporation tax at the main rate. These 4.7% of active companies are responsible for 75% of all corporation tax receipts. Around 224,000 companies paid the small companies rate, with 34,000 benefiting from marginal relief. 264,000 were in the starting rate, with 269,000 benefiting from the lower band of marginal relief. The total revenue was £41.9bn from 831,885 companies. Only 23480 companies had a liability in excess of £100,000.

HM Revenue and Customs (HMRC) has one year from the normal filing date, which is itself one year after the end of the period of account, to open an enquiry into the return. This period is extended if the return is filed late. The enquiry continues until all issues that HMRC wish to enquire about a return are dealt with. However, a company can appeal to the Commissioners of Income Tax to close an enquiry if they feel there is undue delay.

If either side disputes the amount of tax that is payable, they may appeal to either the General or Special Commissioners of Income Tax. Appeals on points of law may be made to the High Court (Court of Session in Scotland), then the Court of Appeal, and finally, with leave, to the House of Lords. However, decisions of fact are binding and can only be appealed if no reasonable Commissioner could have made that decision.

Once an enquiry is closed, or the time for opening an enquiry has passed, HMRC can only re-open a prior year if they become aware of an issue which they could not reasonably have known about at the time, or in instances of fraud or negligence. In fraud or negligence cases, they can re-open cases from up to 20 years ago.

After an HMRC enquiry closes, or after final determination of an issue by the courts, the taxpayer has 30 days to amend their return, and make additional claims and elections, if appropriate, before the assessment becomes final and conclusive. If there is no enquiry, the assessment becomes final and conclusive once the period in which the Revenue may open an enquiry passes.

There is a risk of double taxation whenever a company receives income that has already been taxed. This could be dividend income, which will have been paid out of the post-tax profits of another company and which may have suffered withholding tax. Or it could be because the company itself has suffered foreign tax, perhaps because it conducts part of its trade through an overseas permanent establishment, or because it receives other types of foreign income.

Double taxation is avoided for UK dividends by exempting them from tax for most companies: only dealers in shares suffer tax on them. Where double taxation arises because of overseas tax suffered, relief is available either in the form of expense or credit relief. Expense relief allows the overseas tax to be treated as a deductible expense in the tax computation. Credit relief is given as a deduction from the UK tax liability, but is restricted to the amount of UK tax suffered on the foreign income. There is a system of onshore pooling, so that overseas tax suffered in high tax territories may be set off against taxable income arising from low tax territories.

Detailed and separate rules apply to how all the different types of losses may be set off within a company. A detailed explanation of these can be found in: United Kingdom corporation tax loss relief.

The UK does not permit tax consolidation, where companies in a group are treated as though they are a single entity for tax purposes. One of the main benefits of tax consolidation is that tax losses in one entity in a group are automatically relievable against the tax profits of another. Instead, the UK permits a form of loss relief called "group relief".

Where a company has losses arising in an accounting period (other than capital losses, or losses arising under Case V or VI of Schedule D) in excess of its other taxable profits for the period, it may surrender these losses to a group member with sufficient taxable profits in the same accounting period. The company receiving the losses may offset them against their own taxable profits. Exceptions include that a company in the oil and gas extraction industry may not accept group relief against the profits arising on its oil and gas extraction business, and a life assurance company may only accept group relief against its profits chargeable to tax at the standard shareholder rate applicable to that company. Separate rules apply for dual resident companies.

Full group relief is permitted between companies subject to UK corporation tax that are in the same 75% group, where companies have a common ultimate parent, and at least 75% of the shares in each company (other than the ultimate parent) are owned by other companies in the group. The companies making up a 75% group do not all need to be UK-resident or subject to UK corporation tax relief. An open-ended investment company cannot form part of a group.

Consortium relief is permitted where a company subject to UK corporation tax is owned by a consortium of companies that each own at least 5% of the shares and together own at least 75% of the shares. A consortium company can only surrender or accept losses in proportion to how much of that company is owned by each consortium group.

This is an example computation involving a company that has one associate from which it receives £50,000 group relief.

Although there are no European Union directives dealing with direct taxes, UK laws must comply with European legislation. In particular, legislation should not be discriminatory under the EC treaty.

Also, the case of ICI v Colmer led to the UK amending its definition of a group, for group relief purposes. Previously, the definition required that all companies and intermediate parent companies in a group to be UK resident.

There have been a number of proposals for corporation tax reform, although only a few have been enacted. In March 2001, the Government published a technical note A Review of Small Business Taxation, which considered simplification of corporation tax for small companies through the closer alignment of their profits for tax purposes with those reported in their accounts. In July of that year, the Government also published a consultation document, Large Business Taxation: the Government's strategy and corporate tax reforms. It set out the strategy for modernising corporate taxes and proposals for relief for capital gains on substantial shareholdings held by companies.

In December 2004, Corporation tax reform — a technical note was published. It outlined the Government decision to abolish the Schedular system, replacing the numerous schedules and cases with two pools: a trading and letting pool; and an "everything else" pool. The Government had decided that capital allowances would remain, though there would be some reforms, mostly affecting the leasing industry.

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Taxation in the United States


Taxation in the United States is a complex system which may involve payment to at least four different levels of government and many methods of taxation. United States taxation includes local government, possibly including one or more of municipal, township, district and county governments. It also includes regional entities such as school and utility, and transit districts as well as including state and federal government.

The National Bureau of Economic Research has concluded that the combined federal, state, and local government average marginal tax rate for most workers to be about 40% of income. The Tax Foundation concluded that government at all levels will collect 30.8% of the nation's income for 2008. Tax Day, the day by which tax returns are due, is usually April 15.

Tariffs were the largest source of federal revenue from the 1790s to the eve of World War I, until it was surpassed by income taxes.

The first federal statutes imposing the legal obligation to pay a federal income tax were adopted by Congress in 1861 and 1862 to pay for the Civil War. The 1862 law levied a 3% tax on incomes above $800, rising to 5% for incomes above $10,000. Rates were raised in 1864. This income tax was repealed in 1872, but a new income tax statute was enacted as part of the Wilson-Gorman Tariff Act in 1894.

The United States Constitution specified Congress could impose a direct tax only if it was apportioned among the states according to each state's census population. In its 1895 decision the Supreme Court held in the case of Pollock v. Farmers' Loan & Trust Co. that a tax on income from property (a tax on interest, dividends or rent) was a direct tax under the Constitution, and so had to be apportioned.

The apportionment requirement made income taxes on property practically impossible, and Congress did not want to limit the income tax solely to a tax on wages. Therefore, in 1909 Congress proposed the Sixteenth Amendment, which became part of the Constitution in 1913 when it was ratified by the required number of states. The Amendment modified the requirement for apportionment of direct taxes by exempting all income taxes—whether considered direct or indirect—from the apportionment requirement. Congress re-adopted the income tax that same year, levying a 1% tax on net personal incomes above $3,000, with a 6% surtax on incomes above $500,000. By 1918, the top rate of the income tax was increased to 77% (on income over $1,000,000) to finance World War I. The top marginal tax rate was reduced to 58% in 1922, to 25% in 1925, and finally to 24% in 1929. In 1932 the top marginal tax rate was increased to 63% during the Great Depression and steadily increased, reaching 94% (on all income over $200,000) in 1945. During World War II, Congress introduced payroll withholding and quarterly tax payments, Franklin D. Roosevelt tried to impose a 100% tax on all incomes over $25,000 to help with the war effort. Top marginal tax rates stayed near or above 90% until 1964 when the top marginal tax rate was lowered to 70%. The top marginal tax rate was lowered to 50% in 1982 and eventually to 28% in 1988. However, in the intervening years Congress subsequently increased the top marginal tax rate to 35% which is the tax rate currently in 2008. President Barack Obama's budget consist of raising the top marginal tax rate to 39.6% in fiscal year 2010.

At first the income tax was incrementally expanded by the Congress of the United States, and then inflation automatically raised most persons into tax brackets formerly reserved for the wealthy until income tax brackets were adjusted for inflation. Income tax now applies to almost two-thirds of the population. The lowest earning workers, especially those with dependents, pay no income taxes as a group and actually get a small subsidy from the federal government because of child credits and the Earned Income Tax Credit.

Some lower income individuals pay a proportionately higher share of payroll taxes for Social Security and Medicare than do some higher income individuals in terms of the effective tax rate. All income earned up to a point, adjusted annually for inflation ($94,200 for the year 2006 and $97,500 for the year 2007) is taxed at 7.65% (consisting of the 6.2% Social Security tax and the 1.45% Medicare tax) on the employee with an additional 7.65% in tax incurred by the employer. The annual limitation amount is sometimes called the "Social Security tax wage base amount" or "Contribution and Benefit Base." Above the annual limit amount, only the 1.45% Medicare tax is imposed. In terms of the effective rate, this means that a worker earning $20,000 for 2006 pays at a 7.65% effective rate ($1,530) while a worker earning $200,000 pays at an effective rate of about 4.37% ($8,740).

When an individual's Social Security benefit is calculated, income in excess of each year's Social Security Tax wage base amount (e.g., $97,500 for 2007) is disregarded for purposes of the calculation of future benefits. Although some lower income individuals pay a proportionately higher share of payroll taxes than do higher income individuals in terms of the "effective tax rate", the lower income individuals also receive a proportionately higher share of Social Security benefits than do some higher income individuals, since the lower income individuals will receive a much higher income replacement percentage in retirement than higher income individuals affected by the Social Security tax wage base cap. If the higher income individuals want to receive an income replacement percentage in retirement that is similar to the income replacement percentage that lower income individuals receive from Social Security, higher income individuals must achieve this through other means such as 401(k)s, IRAs, defined benefit pension plans, personal savings, etc. As a percentage of income, some higher income individuals receive less from Social Security than do lower income individuals.

Self employed people pay the entire 15.3%, but are allowed to deduct one-half of this amount in computing taxable income for purposes of the Federal income tax.

The federal government is now financed primarily by personal and corporate income taxes. While it was originally funded via tariffs upon imported goods, tariffs now represent only a minor portion of federal revenues. There are also non-tax fees to recompense agencies for services or to fill specific trust funds such as the fee placed upon airline tickets for airport expansion and air traffic control. Often the receipts intended to be placed in "trust" funds are used for other purposes, with the government posting an IOU ('I owe you') in the form of a federal bond or other accounting instrument, then spending the money on unrelated current expenditures.

The federal government collects several specific taxes in addition to the general income tax. Social Security and Medicare are large social support programs which are funded by taxes on personal earned income. Estate taxes are levied on inheritance. Net long-term capital gains as well as certain types of qualified dividend income are taxed preferentially.

Federal excise taxes are applied to specific items such as motor fuels, tires, telephone usage, tobacco products, and alcoholic beverages. Excise taxes are often, but not always, allocated to special funds related to the object or activity taxed.

The Federal tax law is administered primarily by the Internal Revenue Service, a bureau of the Treasury. The U.S. tax code is known as the Internal Revenue Code of 1986 (title 26 of the United States Code). The Code's complexity generally arises from two factors: the use of the tax code for purposes other than raising revenue, and the feedback process of amending the code.

While the main intent of the law is to provide revenue for the federal government, the tax code is frequently used for public policy reasons i.e., to achieve social, economic, and political goals. For example, to encourage home ownership, the tax law provides a deduction for mortgage interest expense on debt secured by primary residences. In addition, the law does not allow a deduction for renters for rent paid to offset the advantage of nonrecognition of exclusion of imputed owner occupied rent. An income tax system that favors neither renting nor owning homes would not allow the mortgage interest deduction and would tax the imputed rent for owners who live in their own homes.

Because the government uses the tax code as an instrument of social policy, the code as a whole appears to some critics to lack a coherent organizing principle. The purported lack of a coherent organizing principle arguably has become magnified over time, due to the interplay between successive legislative amendments and regulatory changes to the law and the private sector responses to those amendments and changes. For instance, suppose that Congress enacts a tax credit to encourage a particular type of activity. In response, a group of taxpayers who are not the intended beneficiaries of the credit re-order their affairs, or the superficial aspects of their affairs, to qualify for the credit. Congress responds by amending the code to add restrictions and target the credit more effectively. Certain taxpayers manage to use this change to claim additional benefits, so Congress acts again, and so on. The result is a feedback loop of enactment and response, which, over an extended period of time, produces significant complexity.

As of 2007, there are about 138 million taxpayers in the United States. The Treasury Department in 2006 reported, based on Internal Revenue Service (IRS) data, the share of federal income taxes paid by taxpayers of various income levels. The data shows the progressive tax structure of the U.S. federal income tax system on individuals that reduces the tax incidence of people with smaller incomes, as they shift the incidence disproportionately to those with higher incomes - the top 0.1% of taxpayers by income pay 17.4% of federal income taxes (earning 9.1% of the income), the top 1% with gross income of $328,049 or more pay 36.9% (earning 19%), the top 5% with gross income of $137,056 or more pay 57.1% (earning 33.4%), and the bottom 50% with gross income of $30,122 or less pay 3.3% (earning 13.4%). If the federal taxation rate is compared with the wealth distribution rate, the net wealth (not only income but also including real estate, cars, house, stocks, etc) distribution of the United States does almost coincide with the share of income tax - the top 1% pay 36.9% of federal tax (wealth 32.7%), the top 5% pay 57.1% (wealth 57.2%), top 10% pay 68% (wealth 69.8%), and the bottom 50% pay 3.3% (wealth 2.8%).

Other taxes in the United States with a less progressive structure or a regressive structure, and legal tax avoidance loopholes change the overall tax burden distribution. For example, the payroll tax system (FICA), a 12.4% Social Security tax on wages up to $106,800(for 2009) and a 2.9% Medicare tax (a 15.3% total tax that is often split between employee and employer) is a regressive tax on income with no standard deduction or personal exemptions. The Center on Budget and Policy Priorities states that three-fourths of U.S. taxpayers pay more in payroll taxes than they do in income taxes. The Tax Foundation has stated that the burden of the corporate income tax (a 15-39% tax) falls on customers and workers of the corporations, who are often not rich.

Most tax laws are not accurately indexed to inflation. Either they ignore inflation completely, or they are indexed to the Consumer Price Index (CPI), which some argue understates real inflation. In a progressive tax system, failure to index the brackets to inflation will eventually result in effective tax increases (if inflation is sustained), as inflation in wages will increase individual income and move individuals into higher tax brackets with higher percentage rate. One example is the Alternative Minimum Tax; since it is not indexed to inflation, an increasing number of upper-middle-income taxpayers have been finding themselves subject to this tax.

From 1971 to 1977, as the CPI increased 47%, taxpayers faced 60% more taxes at the local, state and federal levels.

Federal payroll taxes in the United States are primarily collected by employers on behalf of the Internal Revenue Service (IRS). The Federal income tax uses a system of direct withholding. Employers deduct part of a taxpayer's income directly from their payroll checks. Self-employed individuals make similar payments to the government. The amount of withholding is calculated based on an employee's expected annual salary and the employee's living situation (married or unmarried, number of dependents, other factors). Withholding does not perfectly calculate an individual's tax each year. The difference between the amount withheld and the actual tax is either paid to the government after the end of the year, or refunded by the government. Withholding is done on an honor system with penalties imposed on individuals who do not have enough withheld (or make enough estimated tax payments) during the year. The amounts deducted can be found in IRS Publication 15, also referred to as Circular E. For farmers, the rules are outlined in Publication 51 (Circular A). The IRS's Publication 505 can also be used to estimate the amount of tax withheld.

Some individuals choose to withhold more of their estimated tax burden than necessary, using the withholding and the refund check at the end of the year as a way of "forced savings" (at zero percent interest). Conversely, other individuals withhold as little as possible, using the general rule that, for purposes of avoiding the penalty for underpayment of estimated tax (a "penalty" that is essentially analogous to an interest charge that covers the periods from each of four specified interim payment due dates to the initial due date for the filing of the tax return), the total tax paid or constructively paid by April 15th of the year following the tax year in question (i.e., the initial due date for filing the return) need be no more than 100% of the previous year's tax liability. Such individuals thus pay a relatively large amount on April 15. Many individuals fall somewhere in the middle.

As of June 2001, the income tax forms the bulk of taxes collected by the U.S. government. Depending on individual income, the tax ranges from zero to 35% of one's taxable income.

The income tax is considered a progressive tax because the tax rate is higher as a percentage of the income for higher-income individuals. For an example showing the tax rates imposed by Congress in 1954 on the taxable income of unmarried individuals—with rates as high as 91%—see the chart at Internal Revenue Code of 1954.

Income tax is also imposed on the taxable income of most corporations and again on dividends paid to stockholders, although individuals usually pay a preferential tax rate on dividends; this is sometimes referred to as double taxation.

One fairly unique aspect of federal income tax in the United States, is that the U.S. uses citizenship in addition to residency in determining whether a person's income is subject to U.S. taxation. All U.S. citizens, including those who do not live in the United States, are subject to U.S. income tax on their worldwide income. There are provisions that exist to reduce double-taxation. Most other countries do not impose tax on their citizens who are not resident within their borders, unless they have income which is sourced in that country (and even then they only tax that specific income).

The U.S. government rewards certain behavior with tax deductions or tax credits. For example, amounts used to pay mortgage interest on a personal home may be deductible, if the taxpayer elects to itemize. Taxpayers who do not participate in an employer-sponsored pension plan may contribute up to $4,000 ($5,000 if age 50 or above) into an individual retirement account, and deduct that contribution from their gross income if they fall within certain income limits. The Earned Income Tax Credit benefits low- to moderate-income working families. It is also possible to receive a child and dependent care credit for amounts spent on daycare.

For businesses, a corporate expense account is treated under the tax code as either "accountable" or "unaccountable". Accountable expense accounts are subject to a variety of restrictions and IRS regulations. There must be a documented business purpose for the account, and spending from the account must be documentable, typically by means of receipts. Any money entrusted to the employee from the account that is not spent for business purposes and accounted for must be returned to the employer.

There are two required ways to calculate the U.S. income tax. The "regular tax" is based on the gross income minus any applicable deductions and then a marginal tax percentage is applied according to the taxpayer's income bracket. From this result, any applicable tax credits are subtracted and the result is the income tax owed. If the result is a negative number due to refundable tax credits and/or if the Federal Withholding Tax was greater than the income tax that was actually owed, the taxpayer is entitled to a tax refund. A taxpayer eligible for a refundable credit (such as the earned income tax credit) may receive a refund even without paying any federal income tax.

The second way, the "Alternative Minimum Tax" (AMT) is based on the gross income, computed without regard to certain tax preference items (such as tax-exempt interest on certain private activity bonds) and with a reduced number of exemptions and deductions. This higher income base is taxed in two rate brackets, 26% and 28%, depending on taxpayer income. The taxpayer pays the higher of the two computed tax liabilities.

In the tax year 2000, many taxpayers in Silicon Valley were caught unprepared by the AMT due to the sudden decline in technology stock prices. Under AMT rules, unrealized gains on incentive stock options are taxed at the date the options are exercised. In contrast, under the regular tax rules capital gains taxes are not paid until the actual shares of stock are sold. For example, if someone exercised a 10,000 share Nortel stock option at $7 when the stock price was at $87, the bargain element was $80 per share or $800,000. Without selling the stock, the stock price dropped to $7. Although the real gain is $0, the $800,000 bargain element still becomes an AMT adjustment, and the taxpayer owes thousands of dollars in AMT.

The AMT was designed to prevent people from using loopholes in the tax law to avoid tax. However, the inclusion of unrealized gain on incentive stock options imposes difficulties for people who cannot come up with cash to pay tax on gains that they have not realized yet. As a result, Congress has taken action to modify the AMT regarding incentive stock options. In 2000 and 2001, people exercised incentive stock options and held onto the shares, hoping to pay long-term capital gains taxes instead of short-term capital gains taxes. Many of these people were forced to pay the AMT on this income, and by the end of the year, the stock was no longer worth the amount of AMT tax owed, forcing some individuals into bankruptcy. In the Nortel example given above, the individual would receive a credit for the AMT paid when the individual did eventually sell the Nortel shares.

Another perceived flaw in the AMT is that it hasn't been changed at the same rate as regular income taxes. The tax cut passed in 2001 lowered regular tax rates, but did not lower AMT tax rates. As a result, certain middle-class people are affected by the AMT, even though that was not the original intent of the law. People with large deductions, particularly mortgage interest and state income tax deductions, are affected the most. The AMT also has the potential to tax families with large numbers of dependents (usually children), although in recent years, Congress has acted to keep deductions for dependents, especially children, from triggering the AMT.

A further criticism is that the AMT does not even affect its intended target. Congress introduced the AMT after it was discovered that 21 millionaires did not pay any US income tax in 1969 as a result of various deductions taken on their income tax return. Since the marginal rate of persons with one million dollars of income is 35% and the AMT uses a 26% rate on all income, it is unlikely that millionaires would get tripped by the AMT as their effective tax rates are already higher. Those that do get caught by the AMT are typically upper-middle class persons making approximately $200k-$500k.

In general, the U.S. income tax is progressive, at least with respect to individuals that earn wage income.

Progressivity in the income tax is accomplished mainly by establishing tax "brackets" - branches of income that are taxed at progressively higher rates. For example, for tax year 2006 an unmarried person with no dependents will pay 10% tax on the first $7,550 of taxable income. The next $23,100 (i.e. taxable income over $7,550, up to $30,650) is taxed at 15%. The next $43,550 of income is taxed at 25%. Additional brackets of 28%, 33%, and 35% apply to higher levels of income. So, if a person has $50,000 of taxable income, his next dollar of income earned will be taxed at 25% - this is referred to as "being in the 25% tax bracket," or more formally as having a marginal rate of 25%. However, the tax on $50,000 of taxable income figures to $9,058. This being 18% of $50,000, the taxpayer is referred to as having an effective tax rate of 18%.

Progressivity, then is a complex topic which does not lend itself to simple analyses. Given the "flattening" of tax burden that occurred in the early 1980s, many commentators note that the general structure of the U.S. tax system has begun to resemble a partial consumption tax regime.

In 2001 the top 1% earned 14.8% of all income and paid 34.4% of federal income taxes. The next 4% earned 12.7% and paid 20.8%. The next 5% earned 10.1% and paid 12.5%. The next 10% earned 14.8% and paid 14.8%, completing the highest quintile, which paid 82.5% of federal income taxes. The fourth quintile earned 20.7% of all income and paid 14.3%. The third quintile earned 14.2% and paid 5.2%. The second quintile earned 9.2% and paid 0.3%. The lowest quintile earned 4.2% and received a net 2.3% from the federal government in income 'credits'. When including social security insurance taxes: In 2001 the top 1% earned 14.8% of all income and paid 22.7% of all federal taxes. The next 4% earned 12.7% and paid 15.8%. The next 5% earned 10.1% and paid 11.5%. The next 10% earned 14.8% and paid 15.3%, completing the highest quintile for a total of 65.3%. The fourth quintile earned 20.7% of all income and paid 18.5%. The third quintile earned 14.2% and paid 10%. The second quintile earned 9.2% and paid 4.9%. The lowest quintile earned 4.2% and paid 1% of all federal taxes. Whether this breakdown is "fair" is a matter of some debate.

The next largest tax is Social Security tax formally known as the Federal Insurance and Contributions Act (FICA). This contribution or tax is 6.2% of an employees' income paid by the employer, and 6.2% paid by the employee. This tax is paid only on earned income and, as noted above, only up a threshold income for calendar year 2006 of $94,200 called the "Social Security Wage Base" (SSWB). The SSWB increases every year * table of SSWB by year] according to the national index average of wages * which also indexes the bend points in the Primary Insurance Amount (PIA) computations. (As of 2008 the SSWB was set at $102,000.) Unearned income like interest from bonds, money market and bank accounts, dividends from REITs and common stocks, rents, and royalties are not subject to the Social Security tax. Wages are defined in the United States Code 42 USC Section 409. Thus, by simple arithmetic higher earners pay a lower average tax rate than those with earned income at the upper end. Self-employed people must pay both halves of the Social Security tax because they are their own employers.

The Medicare tax funds the Medicare program, a health insurance program for the elderly and disabled. 1.45% of the employee's income is paid by the employer as Medicare tax, and 1.45% is paid by the employee. Unlike Social Security, there is no cap on the Medicare tax.

As in FICA, unearned income is not subject to the Medicare contribution.

Together, Social Security and Medicare taxes compose the payroll tax. These taxes are based on income, but unlike the Federal income tax, they are set aside for their specific purposes. That is, there is a statutory requirement that expenditures on these programs Medicare and Social Security come out of current taxes or accumulated trust funds, so if they go broke, the Social Security Administration and Medicare would be without the authority to pay benefits. Unlike Congress, they cannot borrow on the federal government's creditworthiness to fund operations from the credit markets.

The U.S. has a payroll tax to support unemployment insurance. This is 1.2% of the first $7,000, but coordinated with state unemployment agencies and taxes in such a way that most employees are not double taxed in states that have unemployment insurance. The U.S. also has a tax to pay for retraining of displaced workers, but it is only 0.1% of the first $7,000 of income, and it is assessed only on employers. The government tracks tax payment by an account number and payment date. For the IRS, the account number is a Social Security Number, Individual Taxpayer Identification Number, or Employer Identification Number.

In the United States, the federal corporate income rate for the year 2006 varies between 15 and 39% depending on taxable income. But since 1999, when Treasury announced the "check the box" system many corporations can elect to be treated as a pass-through entity, thereby skipping the entity level 35% tax and having all income pass through to the shareholders. This is the tax treatment that the much discussed "S" corporations receive; but now many more types of state-law corporations may avoid double taxation by "checking the box". Dividends are also subject to a lower rate of income tax in the United States. The U.S. corporate tax rate is ranked as the second highest statutory rate among the OECD countries (the U.S. average rate of 39.3 ranks just behind Japan's 39.5 and well above the OECD average of 28.7). However, the U.S also has the greatest number of corporate tax loopholes of any OECD member, allowing many corporations to achieve a lower effective tax rate than the published rates.

The transfer tax generates roughly 1.5% ($30 billion) of the federal government's annual revenue ($2 trillion). It consists of the gift tax, the estate tax and the generation-skipping transfer tax ("GSTT"). Opponents of the transfer tax label these taxes "death taxes". The term "death tax" was popularized by Frank Luntz, a Republican political consultant, but its use goes back to at least the 19th century.

The gift tax is a tax levied on wealth transfers during the transferor's life while the estate tax is levied on transfers made after the transferor's death. The GSTT is a tax in addition to the gift and estate tax and is levied (in rough terms) on transfers made during life or after death to individuals removed by more than one generation from the transferor, for example, from a grandmother to a grandson. Usually transfer tax liabilities are paid by the transferor or the transferor's estate. Payment of transfer taxes by the transferor when the liability is due from the recipient is also a taxable gift.

As of December 2002, tax rates for gift and estate taxes begin at 18% and rise to 50% for gifts over $12,000 or taxable estates over $2.5 million under the Unified Transfer Tax Rate Schedule. The GSTT is a flat 50%. Each individual is granted a Unified Credit (currently $345,800) the effect of which exempts estates under $1 million. Each individual is also granted an annual exclusion amount the effect of which exempts total gifts to any one individual during the year up to the annual exclusion amount (currently $11,000). If the transferor does not elect to pay the gift tax on the value of gifts totaling more than the annual exclusion amount, the individual is deemed to have used a portion of his Unified Credit. An exemption (currently $1.1 million) for transfers subject to the GSTT is also granted to each individual during his lifetime. The Unlimited Marital Deduction allows (non-foreign) spouses to transfer any amount of wealth with no transfer tax consequences.

The U.S. also maintains federal excise taxes on gasoline and other fuels used by vehicles. At this time (2005) they are 18.4¢ per gallon (4.9¢/l) for gasoline and 24.4¢ per gallon (6.4¢/l) for diesel (for highway use). Higher profile excise taxes exist on distilled spirits, tobacco products, and some firearms. Beyond excises taxes on fuel, consumers also pay a 7.5% excise tax on airfare.

U.S. states are recognized as having a plenary power to assess taxes on their citizens and on activities that occur within their borders, so long as those taxes do not infringe on a power reserved for the federal government. The Supreme Court has found, in various cases, that states cannot impose taxes designed to impede interstate commerce or influence international relations. States are also prohibited from assessing taxes in ways that discriminate on the basis of race, gender, religion, alienage, or nationality. Finally, states may not condition the right to vote on payment of taxes. The Twenty-fourth Amendment to the United States Constitution, ratified in 1964, specifically prohibits such a condition in Federal elections; the Supreme Court ruled in Harper v. Virginia Board of Elections that the Equal Protection Clause of the Fourteenth Amendment does the same in state elections.

Local government is now typically financed by value-based property taxes, mainly on real estate. Additional taxes may be in the form of fixed sales taxes and use taxes. Local government fees such as building permit fees may reflect the added capital cost and operating costs of services such as schools and parks. Local governments may also collect fines (parking and traffic tickets), income tax, gross receipts or gross payroll tax, or a portion of sales taxes (such as meal taxes) collected by the state. In California, seeds, bulbs, starter plants and trees obtained from a garden center are taxed if adjudged for decorative purposes while plants for food production are untaxed, as is food in California.

Almost every state imposes "sin taxes" on products frowned upon by the community, including cigarettes and liquor. Many states also impose a gas tax. The power of the state to tax encompasses the ability to empower jurisdictions within the state such as counties, cities and school districts to impose taxes on their residents. These jurisdictions may impose any of the kinds of taxes that the state may, within the boundaries established by state law.

Each state also has its own tax system.

Typically there is a tax on real estate, usually called "property taxes". Real estate taxes are often imposed on the value of real estate by reason of its ownership. For example, in Texas the real estate tax is imposed on the real estate and in particular on the owner of the real estate as of January 1 of each tax year. The tax is computed by applying a tax rate to the appraised value of the real estate as of the tax date. Some states like New York also have a real estate transfer tax.

There may be additional income taxes, sales taxes, and excise taxes (including use taxes). Taxable income for state purposes is usually based on federal taxable income with certain state specific adjustments. For example, some states tax municipal bond interest derived from other states that are otherwise exempt from federal income tax. Thus, this income must be added to the federal taxable income to compute the income amount for state income tax purposes. Oil and mineral producing states often impose a severance tax, similar to an excise tax in that tax is paid on the production of products, rather than on sales. Similarly, most New England states have yield taxes on timber/firewood cutting, payable as a percentage of the value cut, not the profit. Taxes on hotel rooms are common, and politically popular because the citizens will often approve such a tax while the taxpayers will come from other areas.

Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do not levy an individual income tax. New Hampshire and Tennessee only tax interest and dividend income. Delaware, Oregon, Montana and New Hampshire have no state or local sales tax. Alaska has no state sales tax, but allows localities to collect their own sales taxes up to a state-specified maximum.

Many states also levy personal property taxes, which are annual taxes on the privilege of owning or possessing items of personal property within the boundaries of the state. Automobile and boat registration fees are a subset of this tax; however, most people are unaware that practically all personal property is also subject to personal property tax. Usually, household goods are exempt; but virtually all objects of value (including art) are covered, especially when regularly used or stored outside of the taxpayer's household.

States permit the creation of special assessment districts (typically for provision of water or removal of sewage, or for parks, public transit, emergency services or schools) whose boundaries may be independent of other boundaries and whose income may be from one or more of service assessments, property taxes, parcel taxes, a portion of road or bridge tolls, or an additional increment upon sales taxes in addition to the non-tax fees for services provided (such as metered water). State government is financed mainly by a mix of sales and/or income taxes and to a lesser extent by corporate registration fees, certain excise taxes, and automobile license fees.

Cities and counties in the individual states may levy additional taxes, for instance to improve parks or schools, or pay for police, fire departments, local roads, and other services. As in the case of the IRS, they generally require a tax payment account number. Other local governmental agencies may also have the power to tax, notably independent school districts.

Local government usually collect property taxes but may also collect sales taxes and income taxes. Some cities collect income tax on not only residents but non-residents employed in the city. This tax can even be incurred when a non-resident works temporarily in the city. For example, in 1992 the city of Philadelphia began enforcing the collection of city wage taxes on visiting baseball players who played games in Philadelphia. At least some counties levy an Occupational Privilege Tax (OPT), usually for a small amount, in some cases less than $100/yr.

In 2005, the President's Advisory Panel for Federal Tax Reform criticized the tax system as being extremely complex, requiring detailed record-keeping, lengthy instructions, and complicated schedules, worksheets, and forms. They stated that it penalizes work, discourages saving and investment, and hinders the competitiveness of American business. The tax code is commonly riddled with provisions that treat similarly situated taxpayers differently and create perceptions of unfairness. The panel's major reform push was for the removal of the Alternative Minimum Tax, which is not indexed for inflation. Several organizations and individuals are working for tax reform in the United States including Americans for Tax Reform, Citizens for an Alternative Tax System, Americans For Fair Taxation, and Libertarian Party (United States). Various proposals have been put forth for tax simplification in Congress including the FairTax and various Flat tax plans. Proposals have also been put forth to completely abolish the Federal Income Tax for individuals.

Various individuals and groups have questioned the legitimacy of United States federal income tax. One such group argues that the 16th Amendment to the United States Constitution was not approved by the requisite number of States, and therefore never came into effect. The argument that the Sixteenth Amendment was "never ratified" has been rejected by the Internal Revenue Service and by the courts and ruled to be a frivolous argument.

A voluntary disclosure agreement (VDA) is a program whereby taxpayers can receive certain benefits from proactively disclosing prior period tax liabilities in accordance with a binding agreement.

Taxes and fees imposed by federal, state or local laws.

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Fuel tax

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A fuel tax (also known as a petrol tax, gasoline tax, gas tax or fuel duty) is a sales tax imposed on the sale of fuel. In most countries, the fuel tax imposed on fuels which are intended for transportation. Fuels used to power agricultural vehicles, and/or home heating oil which is similar to diesel are taxed at a different, usually lower, rate.

In the United States, the fuel tax receipts are often dedicated or hypothecated to transportation projects so that the fuel tax is considered by many a user fee. In other countries, the fuel tax is a source of general revenue.

Because of the relatively inelastic nature of demand for petrol, in the short run the tax will be an effective source of revenue. In the long run, however, the demand may be more elastic, since people adjust their consumption of petrol; that is, over a period of years, people will consume less as the price increases (by switching to more fuel-efficient cars, mass transit, consolidating trips, carpooling, or just traveling less). However, whether the demand for petrol is elastic or not in the long run is an empirical question, and the price elasticity of demand may change over time, for example, as new technologies and products which are substitutes and/or compliments become available.

Many European countries such as the UK, France, and Italy use a fuel tax to decrease dependence on fossil fuels (that often have to be imported), reduce traffic and reduce pollution.

In some regions of the world, differences in fuel taxes between countries result in a significant level of cross-border purchasing of motor fuel. This is particularly true in Europe, where large differences in fuel taxes, coupled with minimal or no border controls, encourage drivers to cross borders for the sole purpose of filling up their tanks with fuel. Some states, such as Luxembourg, Andorra, Gibraltar, have strategically reduced fuel tax rates to attract more cross-border fill-ups, which ultimately increase tax revenue. Most countries' customs regulations permit the duty-free import of the contents of a vehicle's built-in fuel tank, but there are exceptions. Singaporean customs officials check the fuel gauges of vehicles leaving Singapore and require that the fuel tank be at least three quarters full, in order to limit the importation of lower-taxed fuel from Malaysia. Recently, gas stations in Argentina near the Brazilian border list two different prices for gasoline, one for cars with Argentinian license plates and another one for foreign plates, to restrict Brazilian drivers from buying cheaper fuel in Argentina, generating long lines at the gas stations and driving gas prices up.

Taxes on transportation fuels have been advocated as a way to reduce pollution and the possibility of global warming, conserve energy, and for certain countries reduce dependence on imported oil for foreign policy reasons. Placing higher taxes on fossil fuels makes alternative (and often less polluting) fuels such as natural gas, biodiesel or electric batteries more attractive, and put price pressure on manufacturers and consumers to choose more fuel-efficient products and processes.

Proponents advocate that automobiles should pay for the roads they use and argue that the user tax should not be applied to mass transit projects.

Critics argue transportation fuel taxes are a regressive tax, because low-income people pay a higher proportion with respect to their income, and transportation (to work, school, etc.) is not always an avoidable expense.

One way to address this issue: a tax can be designed to give the revenue back to the consumer through tax rebates. Specifically, this could be done through transfering the money to the Social Security Trust Fund, then credited to current workers. This would reduce workers' payroll tax, which funds Social Security.

Current international petrol pump prices can be seen in Fuel Price Report for May 2008.

In the People's Republic of China, the fuel tax has been a very contentious issue. Efforts by the State Council to institute a fuel tax in order to finance the National Trunk Highway System have run into strong opposition from the National People's Congress, largely out of concern for its impact on farmers. This has been one of the uncommon instances in which the legislature has asserted its authority.

Other fuel (like avia gasoline, jet fuel, heavy oils, natural gas and autogas) prices has no excise tax.

Value Added Tax — 18% on fuel and taxes.

Full tax rate is near 55% of motor fuel prices (ministry of industry and energy facts 2006).

Petroleum products destined for utilization by aircraft engaged in commercial flights outside of the customs territory of continental France are exempt from all customs duties and domestic taxes.

Fuel taxes in Germany are €0.4704 per litre for ultra-low sulphur Diesel and €0.6545 per litre for conventional unleaded petrol, plus Value Added Tax (19%) on the fuel itself and the Fuel Tax. That adds up to prices of €1.03 per litre for ultra-low sulphur Diesel and €1.22 per litre (approximately USD 6.28 per US gallon) for unleaded petrol (March 2009).

The sale of fuels in the Netherlands is levied with an excise tax. A 1995 excise was raised by Dutch gulden 25 cents (€0.11), the Kok Quarter (€0.08 raise per litre gasoline and €0.03 raise per litre diesel), by then Prime-Minister Wim Kok is now specifically set aside by the second Balkenende cabinet for use in road creation and road and public transport maintenance. The 2007 fuel tax was € 0.684 per litre or $ 3.5 per gallon. On top of that is 19% VAT over the entire fuel price, making the Dutch taxes one of the highest in the world.

Even though Norway is the third largest oil exporter, the fuel is heavily taxed. The fuel tax for regular fuel pumps (gas stations) in Norway contributed to 63% of the fuel price in 2007 (The tax was USD 1.42 per litre 95 RON petrol). The government refers to the tax as environmental tax on fuels. The tax is subject to much controversy and debate in Norway, specially since Norway has a widespread population and lack of public transportation in rural areas. In 2008 the coalition government of Norway further increased the tax for petrol and diesel.

Public transportation is subject to the same taxes as private users. The steep increase in fuel prices worldwide in 2006-2008 combined with increased fuel taxes in the same period threatens public transportation in rural areas.

Jet fuel has minor taxes. Diesel for use by farmers is colored red and is not taxed.

From 2007-10-01 the main road fuel (petrol and diesel) duty rate in the UK is GBP£0.5035 per litre (GBP£2.2890/imperial gal or GBP£1.9059/US gal). The rate for biodiesel and bioethanol is £0.3035/L (GBP£1.3797/imperial gal or GBP£1.1489/US gal). Value Added Tax (VAT), currently at 15%, is also charged on the price of the fuel and on the duty. At a pump price of 90.0p/litre (typical for petrol in mid December 2008), this would put the combined tax at 62.09p/litre, or approximately USD$3.49 per US gallon. Thus without tax, the retail price would be 27.91p per litre, making a combined tax rate of 222%.

Diesel for use by farmers and construction vehicles is coloured red and has a much reduced tax.

Jet fuel used for international aviation attracts no duty, and no VAT.

Fuel taxes in Canada can vary greatly between locales. On average, about one-third of the total price of gas at the pump is tax. Excise taxes on gasoline and diesel are collected both federal and provincial governments, as well as by some select municipalities (Montreal, Vancouver, and Victoria); with combined excise taxes varying from 16.2 ¢/L (73.6 ¢/imperial gal; 61.2 ¢/US gal) in the Yukon to 30.5 ¢/L ($1.386/imperial gal; $1.153/US gal) in Vancouver. As well, the federal government and some provincial governments (Newfoundland and Labrador, Nova Scotia, and Quebec) collect sales tax (GST and PST) on top of the retail price and the excise taxes.

Fuel taxes in the United States vary by state. For the first quarter of 2008, the average state gasoline tax is 28.6 cents per US gallon, plus 18.4 cents per US gallon federal tax making the total 47 cents per US gallon (12.4 ¢/L). For diesel, the average state tax is 29.2 cents per US gallon plus an additional 24.4 cents per US gallon federal tax making the total 53.6 cents US per gallon (14.2 ¢/L).

The fuel tax system in Australia is very similar to Canada in terms of its double-dipping tax rates, but varies in the case of exemptions including tax credits and certain excise free fuel sources. Fuel taxes are handled by both the Federal and State Governments, including both an Excise Tax and a Goods and Services Tax or "GST". The tax collected is generally used to help fund national road infrastructure projects and repair roads, as well as provide extra revenue for other services.

Fuel taxes in New Zealand are considered an excise applied by the New Zealand Customs Service on shipments brought into the country. A breakdown of the fuel taxes are, however, published by the Ministry of Economic Development. Excise as at 1 July 2007 totals 42.524 cents per litre ($1.933/imperial gal; $1.607/US gal) on petrol. In addition the national compulsory Accident Compensation Corporation motor vehicle account receives a contribution of 7.33 cents per litre (33.3¢/imperial gal; 27.7¢/US gal) from petrol taxes. This is scheduled to increase in 2008 to 9.34 cents/litre (42.4¢/imperial gal; 35.4¢/US gal). The ethanol component of bio blended petrol currently attracts no excise duty. This will be reviewed in 2012. Diesel is not taxed at pump, but road users with vehicles over 1 tonnes in Gross Laden Weight and any vehicles not powered wholly by any combination of petrol, LPG or CNG must pay the Road User Charge instead. This incorporates an ACC component. The Goods and Services Tax (12.5%) is then applied to the combined total of the value of the commodity and the various taxes. In practice this means that 6 cents of the final pump price to consumers is a GST impost on the excise tax and ACC levy. On 25 July 2007 the Minister of Transport Annette King announced that from 1 July 2008 all fuel excise collected would be hypothecated to the National Land Transport Programme.

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Source : Wikipedia