can raise the needed revenue by imposing a sales tax on the consumption of the c

Question

can raise the needed revenue by imposing a sales tax on the consumption of the citizens of the community. They are particularly entranced with the possible tax revenue that can be gained from a redeveloped mall in the center of the city. The mall, a joint project between the city and a developer, was rebuilt from the ruins of an abandoned shopping center that had been an eyesore for many years. The new mall serves many of the inner city residents who rely on public transportation and live either below or at the poverty line. The mall has been a huge success and has been hailed as the vanguard of a new revived downtown shopping area. A sales tax, however, would impact to a greater extent the many low- and middle-income shoppers who shop downtown, for they would pay a greater percentage of their income to this tax than wealthier shoppers.

Respond to the scenario, and discuss if the sales tax is a good or bad move for the city of Lawsona. Make sure to clearly state your stance on the situation, and explain in detail your reasoning behind your decision. Support your opinion with concepts from this unit’s reading.

Your response should be a minimum of 500 word in APA style. YOUR OWN WORDS ONLY All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

Explanation / Answer

Imposition of sales tax is a good move to meet the financial needs of the state, but it must not affect those who belong to the lower segments of the society and can't afford to pay extra. For achieving this objectives, the government may take following steps.

1. Imposing variable tax rate at the store. The bare essential items of daily consumption like bread, cereals, meats and vegetables, oils and fats, washing aids and cleaners, clothing upto certain price, stationary and other items consumed by common people living on the edge should be exempted from tax, while some other items consumed by middle class can be taxed moderately. The Luxury items like expensive clothing, jewellary, cosmetics, goumet foods can be taxed heavily to make up for the above mentioned rebates.

2. Refund of the tax paid according to the income levels. In this case,the taxes will be levied as per plan at the store, but could be refundable either in full or part according to the income level of shopper in form of a cashback to the bank account. For this, an effective mechanism can be employed by the state, by issuing a shopping card having financial credentials of the holder, which can also record the transaction details and the refund can be done for eligible items shopped.

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