3 ms·

In the planet money podcast, they were talking about how Colorado's new marijuana tax policy should have been implemented, whether the tax should be paid by the

In the planet money podcast, they were talking about how Colorado's new marijuana tax policy should have been implemented, whether the tax should be paid by the grower (which would result in the tax being included in the price) or by the consumer (which would result in the tax being added at the register, which is common for sales taxes in the US). Their conclusion was that if governments wanted to limit consumption, they should choose a policy such that the cost was included in the sticker price, but if they wanted to maximize tax revenue, then they should collect the tax at the register. The way I understand how VAT taxes work, it would seem that this would be friendlier to consumers, to the detriment, perhaps, of overall consumer spending.

vacri 13y ago
The way it works in Australia (I think, certainly not 100% sure) is through tax credits. The miller buys wheat from a farmer, and pays tax because it's a sale. But the miller gets tax credits for later selling that wheat to a baker (in the form of flour). The baker pays tax on the flour, but puts tax on the bread. At each stage value is added to the object, and due to the credits, the differential of that value has the appropriate tax. So if you have a wholesale/retail business, you have an easier time of it - everything gets taxed at the same level, and your clients that onsell can claim their own tax credits. It is the final purchaser of the product that ends up actually forking out for the tax.