Sales Tax and Use Tax
Sales tax is the tax that retailers ought to pay to the government for their sale of goods and services. On the other hand, use tax is the tax that a consumer pays for the consumption of goods whose sales tax was not applied (Fields 24). Further, the use tax is also applied when a customer buys foods in a separate state and fails to pay taxes in that state. The use of sales and use tax is hence a fair means of generating income for the government. For instance, using the use tax, the government ensures that every citizen is responsible for their tax remittances and hence does not take advantage of online or out of state purchases. Since most retailers are self-employed, it is important that they also remit their share of taxes to the government, to allow it to sufficiently meet its obligations.
Although reducing taxes may seem like a good strategy for dealing with the surplus tax, the best option would be to increase spending. At whatever level, the citizens are in constant demand for better services and resources (Brux 40). The extra income would also be effectively used to make investments that would in return bring in more income for the government which could be used for the future resources. The federal government may also consider the debts that it may have acquired over time and effectively plan on reducing them so that it can continuously have a stable balance of payments in the preceding periods.
Arguments for Increased Spending
Increased spending would be an excellent way of dealing with the surplus tax because this would translate to more resources for the public. The legislative should seek for new avenues which they can increase service delivery and channel the extra resources to the same (Brux 56). Various diseases are coming up and there is a need to engage in research which would ensure that the citizens deal effectively with them. In this case, the government can facilitate the research by funding the scholars and giving them scholarships for their studies. Besides, the government should use the excess revenue in improving the state of the public goods such as road, network, aircraft and even security.
The best areas to focus on the cut would have to be the funds used for entertainment directed at the public officers. The government would also need to check the salaries that it has been paying its employees and make appropriate cuts to suit the prevailing economic condition. Further, the government would also need to reduce the pension schemes as this would also be using a great fraction of the government’s revenue.
Rainy Day Fund
The federal government can tap into the rainy day fund when it is experiencing a budget deficit and yet needs to provide essential services to the citizens like health and education. The legislature may also use the rainy day fund in instances where the government deficit is affecting government operations with other countries. International relations is important for the government’s growth and the funds may hence be used to enhance the relationship with foreign countries.
In 2003, state lawmakers voted to reduce the budget for state colleges and universities by 11% (Watkins). The legislators hence chose to give up their power so that the various learning institutions would individually make up for the reduction in financial resources (Watkins). To fund their various services, universities have been forced to increase their tuition fees. Most universities are taking on huge projects that do not necessarily serve the needs of the students and this is often financed by the school fees. Consequently, I have had to take up student loans to facilitate my fees.
Brux, Jacqueline M. Economic Issues and Policy. Mason, OH: South-Western Cengage Learning, 2011.
Fields, Robert J. Understanding and Managing Sales and Use Tax. Chicago: CCH, 2012.
Watkins, Matthew. "Lawmakers Want To Rein In Texas Universities — Four Years After Gutting Their Oversight Board". The Texas Tribune, 2018, https://www.texastribune.org/2017/04/21/lawmakers-want-rein-texas-universities-theyre-who-set-schools-free/. Accessed 17 Apr 2018.