the governor of the state of mobby has asked you to give him advice on a...

the governor of the state of mobby has asked you to give him advice on a proposed expansion of the state sales tax base to include all services and goods，currently the state only taxes goods. what are the pros and cons of this expansion，explain it

Expert Solution

Pros-

Bring equality for the businesses in good and in services when both are taxed accordingly
Non Evadable - Since sales tax are charges to end consumer the taxes are not Evadable
Easy collection- Also since end consumer only will be paying it collection becomes lot more simpler
When charged on services essentially the tax base rises and contributes to the national income
Helps in reducing predatory prices by services company which is detrimental for the health of whole industry
Consumer have the direct choice available to whether use that service or not
Bricks and mortar will have the same level playing field as that of internet based ecommerce

Cons-

Higher burden on consumers
Detrimental for overall health of industries
Consumer surplus will come down
Private saving will be impacted
Uniformity of tax rate remains the question
Regressive in nature since this will increase tax burden on poor people
Hurt the growth of free market

Rahul Sunny answered 1 year ago

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