Xjyuk

Whenever we go to a store or supermarket we pay taxes on many products. Sometimes different products have different tax rates too, which makes things even more complicated. I was wondering if stores and supermarkets use our sales taxes to pay for their taxes, or do our taxes go directly to the government while they have to pay additional taxes on top of what we pay.

If they use our taxes to pay the government, why don't they just include it in the price that you see to make things more predictable and simple? They can even show how much of the price you pay that contributes to taxes on the receipt after checkout...

The mechanism for paying income tax varies by business type, in general it's paid quarterly. Sales tax is separate regardless of business type. They collect sales tax from purchases and then send those collected sales taxes to the government(s).

Sales tax is collected on sales, while income tax for the business requires profit to be made. So an unprofitable company could collect (and pass along to the government) millions in sales tax without paying any income tax. How much income tax needs to be paid for an individual transaction is unknown until end of tax period.

One reason why sales tax isn't included in the listed price is because sales tax rates vary by city/county/state and stores in multiple regions often have one website and mail advertised prices to large regions. If I find a tv I want at Best Buy, I could order it online and pay the sales tax rate for my home address, or I could drive to a store in a different city and pay the sales tax rate for that city. To include sales tax in the price means advertisements would have to be based on an individual location. Some retailers do this by requiring you to log in or put in a zip code to get a price, but even then they typically still show sales tax separately.

To add to Hart CO's correct answer, the collection of sales tax is a burden on the business. In most cases it is straightforward, but not all.

In one jurisdiction, there was an additional surcharge on desserts except for those that include ice cream. So restaurants, in a certain area, would have to collect and send taxes to a small local government only in that case of someone ordered a dessert that did not include ice cream. I worked for a national chain at the time and there was no way to identify if a dessert included ice cream nor could you use zip code to identify the locations that these laws applied.

If one is to open a retail business one must have a firm grasp of the sales tax laws where one operates.