Sales Tax - Retail – IMPLAN

Hello, I was searching through the forum for sales tax questions based on retail and found this particular post http://test.implan.com/index.php?option=com_kunena&func=view&catid=84&id=17482&Itemid=35 Specifically this last paragraph was particularly helpful, "If you are planning on applying the new tax rate to the IMPLAN’s retail sectors 320-330, then you should remember that the total output impact for the retail sectors is gross margin, not gross sales. Yet sales taxes apply to gross sales. Thus, before you apply your new tax rate to these sectors, you will need to convert those margins to sales. You can get the retail margins for these sectors by navigating to Edit Event Option>Edit Event Properties>Margins>Yes to see the margin for each retail sector. Now divide the total output impact for the retail sector by that retail sector's margin (in decimal form) to get gross sales. This figure is multiplied by the new sales tax rate for each sector and summed to get the total direct sales tax impact. Again, since the indirect and induced taxes in the model absent the new tax rate involve many industries, the average distribution of these taxes as generated by the software would still be appropriate in these cases. Adding the calculated direct tax impacts to the model estimate of indirect and induced taxes to get total State and Local taxes in the study region." Since the question in the original topic was about a new sales tax rate, I wanted to clarify whether the standard IMPLAN results take this process into account? Also, say I want to look at the sales tax effects from a retail impact, using a tax rate I have access to. Can I just use the tax rate with the retail results that are given to me? Or, it would seem, I have to convert the margined values back to sales as mentioned above? Thanks for any help you can give me.

IMPLAN Support

June 12, 2015 21:38

Thank you for your post! The sales tax remitted by retail establishments accounts for all of the sales tax that one pays at retail establishments. So, if you have an impact event (assuming this what you mean by IMPLAN’s “standard impact results”) that is of retail margin only, the (direct) sales tax impact is: (regional sales tax share of TOPI)*(Retail TOPI impact). This is the same as if you entered gross retail sales. The model is assuming that when you have a retail margin impact, that margin impact arises from gross sales at a retail establishment, but you happen to know only the margin. In other words, IMPLAN does give you a tax impact that is a sales tax rate applied to the total value of retail margin. Regarding your second question – right, it would not make sense to apply the sales tax rate to the retail margin, you would want to apply a sales tax rate to gross sales. But, note that gross sales in IMPLAN includes TOPI, so it includes sales tax. So, you should calculate gross sales, divide that by (1+current sales tax rate) to get gross sales less sales tax that was paid on it, then multiply the result of that by your new sales tax rate to get new sales tax revenue.

Sales Tax - Retail

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