Jan 29, 2008 8:58 pm US/Pacific
Good Question: How Does Fractional Tax Work?
SACRAMENTO (CBS13) ―
Lynne Shupp works with numbers all day as a financial adviser and planner. She did a little research to answer Brad Preston's Good Question. He bought two cell phones on sale 50% off each. But when he got home he realized he'd been taxed at full price. He wants to know, how can they do that?
They have bundled services and unbundled. Shupp says if you buy a phone and a calling plan at the same time.
"Bundled with the service that they got then the vendor, or seller, is obligated to tax based on the full price of the phone bundled in that service."
David Brady wants to know why he's not charged sales tax for buying a Slurpee at the AM/PM but is at the 7-11. Shupp says the AM/PM has a food mart but is first and foremost a gas station.
"Their primary source of revenue would be from the gas and their services that are automotive so they would not pay a tax on that."
So there's no tax on a Slurpee at the AM/PM. And the taxes on a penny, Peter Lira from Galt points out you don't get it back in change.
"If we had a fractional penny coin that might be possible but we don't."
Shupp explains it's a fractional tax that the government rounds up. Some estimates she saw suggest nationwide that adds up to more than a billion dollars. They're cashing in but how much are you out? If you buy five hundred gallons of gas each year, the grand total is a full forty five cents.
(© MMVIII, CBS Broadcasting Inc. All Rights Reserved.)
