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2.3 Consumption Taxes

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.)

    A spreadsheet is available to help you complete this exercise.

    • 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.

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     `--`        `-`'    `-`  --`   `---`    `-----`  
                                                      
    
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  • 20. Value-Added Tax on a Truck

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

    A spreadsheet is available to help you complete this exercise.

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     -----`     `---`    `--`     `-`   `-`  `-` --` 
                                                     
    
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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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