Tax Transitions and Your processing Options

The objective of this long transition period would be to give consumers and businesses the time necessary to adjust to the new reality. In addition, it would also be necessary to gradually reduce the tax benefits existing in the current tax model allowing companies to adapt to change without unnecessary complications.

The single rate greatly simplifies the collection process

The adoption of a single rate does not require the classification of goods and services in several categories, which inevitably generates distortions and litigation.

The uniqueness of the rate empowers the citizen, who knows exactly what the government’s share is in the cost of the goods and services he is purchasing, and is now able to compare this cost with the return obtained in the form of public services. But how do i figure out sales tax? Then there comes the tx calculator.

The Additional Aspect

In addition, the CCiF also believes that the IBS should have a minimum of exemptions and special tax collection regimes and recognizes that the transition to a single rate model is politically complex, given the large sectorial impact differential of the current tax regime and that inevitably there will be pressure to adopt differentiated rates for some goods or services.

However, the mere fact that a sector is taxed at a lower rate today is not a sufficient reason to maintain different treatment in the new model. Any discussion of reduced rates should undergo a good assessment of the reasons for differentiated treatment and, above all, of its impact on the creation of a more complex and less transparent tax system.

The Should and Shouldn’ts

However, CCiF understands that IBS should not be used for extra-tax purposes. The purpose of this tax would simply be to collect to finance government expenditure. Therefore, other public policy objectives must be achieved through other instruments.

Using the same example of the exemption from the basic food basket, CCiF understands that, although poor families spend a larger share of their income on purchasing products from the basic food basket, wealthy families spend a greater amount on purchasing these products. In this context, it is more effective, from a distributive point of view, to collect the tax on the products in the basic basket and transfer the amount collected to the poorest families, or even transfer the amount collected in equal amounts to all families.

Conclusion

The proposal is that the states have autonomy in setting the state portion of the IBS rate. In other words, the tax rate would be unique within each state, but it could vary between states. In the transition to the IBS, a state reference rate would be defined, which would be automatically adopted for all states. From this, the possibility would arise, by law, to establish a rate higher or lower than the reference rate. In interstate transactions , for taxpayers or non-taxpayers, the rate of the destination state of the good or service would be used .