Final answer:
Sales Tax codes are classifications assigned to products or service items for the purpose of calculating sales tax, which is a percentage imposed on the retail sales of goods and services. They vary based on numerous factors and are collected at the point of sale. The calculation involves multiplying the item's price by the sales tax rate and adding it to the base price.
Step-by-step explanation:
Sales Tax codes are a classification for calculating and reporting sales tax and are assigned to each product or service item, as well as to each customer. These tax codes are used by businesses to determine the correct amount of sales tax to charge on different items, which can vary based on the type of product or service, the location of the sale, and other factors.
Sales taxes are a form of taxation imposed on the retail sale of goods and services and are typically collected by sellers at the point of sale. The rates can differ substantially, with some items like food and medicine often being exempt to make the tax system less regressive. Nevertheless, sales taxes tend to take a larger percentage of income from those with lower incomes, which is why they are sometimes considered regressive taxes.
To calculate the amount of sales tax, one uses the price of the item and multiplies it by the rate of sales tax (Amount of sales tax = price × rate of sales tax). This amount is then added to the original sale price to get the final amount paid by the consumer.