Sales Tax

All about government sales tax

Sales tax is a surcharge levied on goods and services to generate revenue for state, provincial and federal governments. In the United States, sales tax rates are set by the state; in Canada, there is a federal government sales tax known as the Goods and Services Tax (GST). It applies to most goods and services, and is applied on top of provincial taxes. Some provinces have introduced a Harmonized Sales Tax (HST), which combines federal and provincial sales taxes into a single charge and expanded the scope of taxable products and services.

Sales Tax Rate Information

In the United States, state sales tax rates vary from 4 percent up to about 9.1 percent. There are also numerous states that don't charge any sales tax, including Alaska, Delaware, Montana, New Hampshire and Oregon.

Sales taxes are generally higher in Canada. Alberta and the three northern territories are the only jurisdictions that don't charge any provincial sales tax. In the other provinces, rates range from 5 percent (Saskatchewan) to 10.5 percent (Prince Edward Island), with most provinces falling in the 7 to 9 percent range. These charges are levied in addition to the GST, which was recently rolled back to 5 percent, creating total sales taxes of between 5 and 15.5 percent, depending on the province.

Avoid Sales Tax

Unfortunately, there is little you can do to avoid sales tax. In many states and provinces, sales taxes cannot be applied to items that are considered "necessities of living," with staple groceries like bread, eggs, flour and milk being among the simplest examples. Otherwise, since it is added to the cost of the goods at the point of sale, you can't do much to avoid them in stores. The only exceptions come from exemption certificates, which must be issued by the state and presented to the retailer at the point of sale.

Shopping online may allow you to sidestep some sales taxes, depending on the location of the vendor. Also, when you're traveling abroad, keep all your receipts. You may be eligible for sales tax reimbursements from the government of the country, state or province you visited upon your return home.