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Gross Receipts Tax |
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Also known as the gross excise tax, the Gross Receipts Tax is one of the major ways of collecting revenue by the government. All kinds of Gross Receipts Tax are levied on the net income and profit of a company in a particular fiscal year. Unlike moat sales taxes Gross Receipts Tax is usually levied on the merchandiser instead of the purchaser. Like all kinds of income taxes, Gross Receipts Tax are a way of the government to increase the fund flow in the reserve bank of the nation. Once all such taxes are collected and assembled, they are used by loyal governments to maintain a welfare state.
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Beginning from rebuilding the economy to improving the infrastructure of the nation, income tax once collected may be used for a whole lot of purposes. The percentage of Gross Receipts Tax is decided on the basis of income of the company, corporate house or business hub. Ssopecial precautions are taken to keep a check on the companies, so that they do not escape Gross Receipts Tax. For this reason many a times the income tax department often raids those companies whom they suspect of escaping Gross Receipts Tax. Never included in the main sales tax structure, a Gross Receipts Tax is usually levied in such a way that ultimately it is the consu,mer who finally opays fopr it. For the moment a company is charged with a huge amount of sales tax it is likely to increase the hidden costs behind its products. An ideal system however, never talks about any such indirect taxation system. Since all democracies have their negative points Gross Receipts Tax is more of a practice than a rule.
Most economists do not support the system of Gross Receipts Tax, for there appears to be too many loop holes embedded the system. Chances are also high that a corrupt government may enter into an unholy nexus with the leading business tycoons. Many democracies have record of such unholy alliances between major political parties and business houses. It is also believed that instead of contributing to the revenue bank of the nation most companies tend to escape Gross Receipts Tax by paying in kind to the party in power. In underdeveloped countries where the divi9de between the rich and the poor is more such practices more common. In fact chances are also high that with Gross Receipts Tax the divide between the rich and the poor will only be increasing in the near future. Transparent systems however, can continue running a smooth fiscal flow in spite of all such taxes. If the taxation system follows rational rules and the public is aware of its rights and duties, Gross Receipts Tax may actually prove to be a lion's share of income for the government. Most companies announce their annual turn over and half yearly turn over in leading dailies. With this they not only present a clear picture of their account to the government but also present a pretty picture before the public. However, careful governments often do not go by such annual announcements and carry on their own investigations before levying any kind of Gross Receipts Tax.
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