Excise Taxes: Study Sheet

• Sales Tax is a tax levied on the retail price of products and services which is collected by the retailer and subsequently remitted to the appropriate government agency.
• Value-Added Tax, or VAT, is a tax levied on products which reflects the estimated value added to the product at each stage of production or distribution. The VAT is ulimately paid by the customer.

• The sales tax rate is expressed as a percentage
• Given the purchase price of a product or service and a sales tax rate:

  Sales Tax = (Purchase Price) x (Sales Tax Rate)

• Once the tax is computed, it is added to the purchase price to determine the total amount the customer must pay for the product or service

• The value-added tax rate is expressed as a percentage
• Given the purchase price of a product and a value-added tax rate:

  Value-Added Tax = (Purchase Price) x (Value-Added Tax Rate)

Get More Help!

Click one of these links to get more help from another Cramlet in this same chapter:

• Excise Taxes: Study Sheet
• Calculating Sales Tax: Bottomless Worksheet
• Calculating Value-Added Tax
• Calculating Value-Added Tax: Bottomless Worksheet
• Calculating Sales Tax