September 4, 2019

Living In America: Sales Tax or VAT?

Which Tax system would you prefer? Photo: Flickr

I should note here that this post and the ones I will be making are observations from my point of view as one of them damn foreigners who that wall will keep out. So if any of you get offended by my views, feel free to let me know! This is going to be a twice monthly post from me, detailing my observations about living in America as a British Expat.

The USA is a very strange place for a foreigner. You might think, coming from Britain, that life in the USA isn't all that different from that small little island that once ruled 23% of the Earth's population. We speak the same language (after a fashion) and our two countries have cultures that we can both understand....

....or can we?

Today I want to talk about sales tax. Now, for those who've never been to the United States, sales tax is similar to the British VAT (Value Added Tax), only it isn't really. When I first visited the USA back in those heady days of 2008, Democrat Barack Obama had just been elected President, ending the 8 year term of Republican George W Bush and I was stepping on a Continental Airlines flight to Texas. (I'll leave it to you to decide which was the more important event in American history).

Granted, my research about the USA was sparse. I was going off what I'd seen on TV and movies and from the various Americans I'd spoken to online. Those Americans, including the one who is now my wife, had failed in their duty to tell me about things which would shock and horrify me. One of those shocking things was sales tax. I had walked into a grocery store called HEB, a major supermarket chain in Texas and decided, very boldly, to purchase something. That something was a chocolate bar. (An Emergency Twix, for you Peep Show fans out there).  Now, the price on the shelf said 78c and I had change on me so I counted out two quarters, two dimes, a nickel and three pennies as the girl scanned it through. Then I looked up and she put her pinky finger to the side of her mouth and announced


Or maybe it was $1.08. It was a long time ago.

I stood there with a confused look on my face, wondering where this number had come from. Had the Twix gone up in value in the time it took me to take it off the shelf and place it on the conveyor belt? I pointed back to the shelf and mumbled something about it saying 78 cents on the shelf. Perhaps I'd mistaken this Twix for another item that cost only 78 cents? No! I saw the label clearly and it said 'Twix' and in big bold font the number 78 and the small 'c' above it. Maybe this girl was jesting with me? Maybe she was a highwayman in disguise as a checkout girl? Maybe she embezzled all who came through her line and pocketed the difference and laughed secretly to herself when she was alone in the break room. Maybe she was still bitter about the revolutionary war. I looked hard at her teenage face and wondered if she'd been there at Lexington and Concord. Perhaps she had fired the first shot?

Sensing my confusion on the subject, the girl too looked confused. She muttered the word "Tax" at me. It was then I understood. I quickly fished in my wallet for a dollar bill and kept the nickel and three pennies and handed them to her. She smiled as I gingerly took my Twix, my mind working feverishly to figure if this was a trap as she cheerily said "Have a nice day!" and turned to serve the next customer. I backed away slowly, out of the store into the hot sun where my twix melted in my hand. It was later explained to me about adding the sales tax on at the register. Every state's sales tax is different and five states don't have it at all. They are Alaska, Delaware, Montana, New Hampshire and Oregon, in case you were wondering.

In Britain, the tax is added into the price you see. So if you go into a shop and see something for £1.50, it will actually be that price when you check out. Amazing, isn't it? I remember when Erica paid for something by herself she came up to me and said "It really was only a pound!"

So why does this system exist? Indeed, it forces people to do maths (or math with out the 's' as it's known here) and that can be incredibly exhausting for people who don't think much like me. The last thought I had was in 2014! Wouldn't it be easier to do it the British way? I'd love to know what you think! Tell me if you think it's easier the American way or the British way.

-Dominic Williams


  1. Hi Dominic. In business to consumer sales (B2C) here in the UK it is as you say usual for tax to be included in the ticket price. Much the simplest way for most transactions, the price you see is the price you pay. Business to business (B2B) sales do not usually include VAT on price tickets, or if they do, the inclusive price will be below the net price and in smaller print. Many consumers wouldn't be aware of this as it never affects their purchases. Probably the reason for quoting tax separately in B2B transactions is that most businesses will have to complete VAT returns, and may be able to reclaim the tax. This paperwork would be easier to do if price tickets and invoices show the tax separately.

    1. Hi Chris! The B2B thing makes sense! Thanks for commenting!

  2. Good to know your articles about Tax and VAT. I think about moving there for experience.