### 2.3 Consumption Taxes

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• 15. Sales Tax on an Automobile

During the production of a car, value is added by the following.

• Raw materials manufacturers: \$7000
• A car manufacturer: \$11,000
• A car dealer: \$5000

The sales tax rate is 6.0%. What is the sales tax on the car? (See Example 5.)

• Worked-Out Solution

To find the retail price of the car, add the three given values.

The sales tax on the car is

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``` _    _    _    _    _____       ___
| |  | || | || | || |  __ \\    / _ \\      ___
| |/\| || | || | || | |  \ ||  / //\ \\    /   ||
|  /\  || | \\_/ || | |__/ || |  ___  ||  | [] ||
|_// \_||  \____//  |_____//  |_||  |_||   \__ ||
`-`   `-`   `---`    -----`   `-`   `-`     -|_||
`-`
```
• 16. Value-Added Tax on an Automobile

During the production of a car, value is added by the following.

• Raw materials manufacturers: \$7000
• A car manufacturer: \$11,000
• A car dealer: \$5000

Use the spreadsheet to find the value-added tax of 6% at each stage. Compare the value-added tax of 6% with a sales tax of 6%. (See Example 5.)

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```  ______   __   __   _    _     _____    __   __
/_   _//  \ \\/ // | \  / ||  |  ___||  \ \\/ //
| ||     \ ` //  |  \/  ||  | ||__     \   //
_| ||      | ||   | .  . ||  | ||__     / . \\
/__//       |_||   |_|\/|_||  |_____||  /_//\_\\
`--`        `-`'   `-`  `-`   `-----`   `-`  --`

```
• 17. Value-Added Tax on an Automobile

Using the value-added tax approach, what is the retail price of the car? (See Example 5.)

• Worked-Out Solution

Use a spreadsheet to find the value-added tax at each of the three stages of manufacturing and retailing.

The retail price of the automoble is \$24,380. That is the same total found in Exercise 15 found with a retail value of \$23,000 and a sales tax of 6%.

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```  _  __    ______   _    _     _____    ______
| |/ //  /_   _// | \  / ||  |  ___|| |      \\
| ' //    -| ||-  |  \/  ||  | ||__   |  --  //
| . \\    _| ||_  | .  . ||  | ||__   |  --  \\
|_|\_\\  /_____// |_|\/|_||  |_____|| |______//
`-` --`  `-----`  `-`  `-`   `-----`  `------`

```
• 18. Sales Tax on a Truck

During the production of a truck, value is added by the following.

• Raw materials manufacturers: \$11,000
• A truck manufacturer: \$16,000
• A truck dealer: \$7000

The sales tax rate is 8.25%. What is the sales tax on the truck? (See Example 5.)

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```  _  __     ___      ______     ___      ____
| |/ //   / _ \\   /_____//   / _ \\   |  _ \\
| ' //   / //\ \\  `____ `   | / \ ||  | |_| ||
| . \\  |  ___  || /___//    | \_/ ||  | .  //
|_|\_\\ |_||  |_|| `__ `      \___//   |_|\_\\
`-` --` `-`   `-`  /_//       `---`    `-` --`
`-`
```
• 19. Value-Added Tax on a Truck

During the production of a truck, value is added by the following.

• Raw materials manufacturers: \$11,000
• A truck manufacturer: \$16,000
• A truck dealer: \$7000

Use a spreadsheet to find the value-added tax of 8.25% at each stage. Compare the value-added tax of 8.25% to a sales tax of 8.25%. (See Example 5.)

• Worked-Out Solution

Enter the given information into a spreadsheet.

Using a value-added tax, the retail price for the consumer would be

Using a sales tax of 8.25%, the retail price for the consumer would be

So, either way, the consumer ends up paying the same retail price.

These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.

``` _    _      ___     _____       ___     __   _
| |  | ||   / _ \\  |  __ \\    / _ \\  | || | ||
| |/\| ||  | / \ || | |  \ ||  | / \ || | '--' ||
|  /\  ||  | \_/ || | |__/ ||  | \_/ || | .--. ||
|_// \_||   \___//  |_____//    \___//  |_|| |_||
`-`   `-`   `---`    -----`     `---`   `-`  `-`

```
• 20. Value-Added Tax on a Truck

Using the value-added tax approach, what is the retail price of the truck? (See Example 5.)

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```   _____     ___     ______      ___     _____
/ ___//   / _ \\  |      \\   / _ \\  |  __ \\
\___ \\  / //\ \\ |  --  //  / //\ \\ | |  \ ||
/    // |  ___  |||  --  \\ |  ___  ||| |__/ ||
/____//  |_||  |_|||______// |_||  |_|||_____//
`-----`   `-`   `-` `------`  `-`   `-`  -----`

```
• 21. Excise Tax on Gasoline in Different Countries

The graph shows the prices of gasoline in eight countries. Use percent to compare the taxes collected per gallon of gasoline in the United States with those collected in Germany. (See Example 6.)

• Worked-Out Solution

The gasoline excise tax in Germany is \$4.54 per gallon. In the United States, the gasoline excise tax is \$0.41 per gallon. There are different ways to compare these two amounts.

"Gasoline excise tax in Germany is about 11 times the gasoline excise tax in the United States."

"Gasoline excise tax in Germany is about 1100% of the gasoline excise tax in the United States."

"Gasoline excise tax in the United States is less than one tenth of the gasoline excise tax in Germany."

"Gasoline excise tax in the United States is about 9% of the gasoline excise tax in Germany."

A different approach to answering the question is to compare the percent of the retail value that is excise tax in each country.

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```  _  _     _____     ______     ___      _____
| \| ||  |  ___||  /_____//   / _ \\   /  ___||
|  ' ||  | ||__    `____ `   / //\ \\ | // __
| .  ||  | ||__    /___//   |  ___  ||| \\_\ ||
|_|\_||  |_____||  `__ `    |_||  |_|| \____//
`-` -`   `-----`   /_//     `-`   `-`   `---`
`-`
```
• 22. Patterns in a Graph

The graph shows the prices of gasoline in eight countries. Describe any patterns you see in the graph. (See Example 6.)

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``` _    _    __   __    ____      ______    _____