Introduction

The sales tax, after the federal income tax, is probably the tax most familiar to the American taxpayer. Most consumers confront retail sales taxation on a daily basis and give it little thought. It is simply a part of the shopper's life. The sales tax has an obvious meaning to consumer and economist alike; it is a tax, generally ad valorem, on the transfer of commodities and services, usually at the retail level. An ad valorem tax is one in which the product bears a uniform percentage of the purchase price.

The sales tax is not necessarily a single-stage tax. It can be levied at any number of points in the production and distribution process. In reality, the sales tax is often a combination of a turnover tax and a single-stage tax (Morgan 1964:7). Although the sales tax base can vary considerably, the sales tax is not an excise tax that is a specific selective levy (Due 1957:3). Normally, the sales tax applies to a general category of goods (e.g., all retail commodities), with any exemptions made explicit. Although the sales levy is very similar in economic effect to the business occupation tax, it can be distinguished by legislative intent. The sales tax is implicitly or explicitly made with the intent that the levy will be passed forward to the purchaser, whereas the gross receipts occupation tax is on business per se for the privilege of doing business (Due 1971:2).