On making an exempt purchase, Exemption Certificate holders may submit a completed Colorado Sales Tax Exemption Form to the vendor instead of paying sales tax. Effective January 1, 2021, the City of Colorado Springs sales and use tax rate will decrease from 3.12% to 3.07% for all transactions occurring on or after that date. Page 1 of 2 Revised 12/22/2020 MEMORANDUM TO: To Whom It May Concern FROM: Milo Hay, Local Government Analyst III Local Government Support Unit Date: December 22, 2020 (Revised) SUBJECT: LOCAL TAX CHANGES – EFFECTIVE January 1, 2021 STATE COLLECTED City Tax Tax Rate Exempt* Use Tax Service Fee Canon City (From Self-Collected to State-Collected) Numerous changes affecting local sales and/or use tax take effect in Colorado on January 1, 2018. DENVER (CBS4) – Denver voters approved a new retail sales tax that would be used to fund services for people experiencing homelessness. AMT exemptions phase out at 25 cents per dollar earned once taxpayer AMTI hits a certain threshold. Historically, compliance rates with with the Colorado Use Tax have been low. 1325 G St NW Economic impact studies have shown the Stock Show generates some $120 million of economic activity to the metro Denver area. This article contains the Florida Department of Revenue's TIP on what those rates are going into 2021. Effective January 1, 2021, the City of Colorado Springs sales and use tax rate will decrease from 3.12% to 3.07% for all transactions occurring on or after that date. In 2021, the 28 percent AMT rate applies to excess AMTI of $199,900 for all taxpayers ($99,950 for married couples filing separate returns). The rate change will take effect Jan. 1, 2021, and will increase monthly bills for most single-family customers by less than 70 cents if they use water at similar volumes to 2020. Voters in the Mile High City chose to increase their local taxes by 0.5 percentage points to fund efforts to reduce the city’s carbon emissions and to support homelessness relief programs.[10]. Losing an event that draws more than 700,000 visitors from 42 states and 35 countries hurts in many ways, but the City of Denver’s tax coffers will undoubtedly feel the loss of the 2021 National Western Stock Show most acutely. Companies or individuals who wish to make a qualifying purchase tax-free must have a Colorado state sales tax exemption certificate, which can be obtained from the Colorado Department of Revenue . Colorado's sales tax rates for commonly exempted items are as follows: Unlike a Value Added Tax (VAT), the Colorado sales tax only applies to end consumers of the product. It is worth noting that population numbers are only published at the ZIP code level every 10 years by the U.S. Census Bureau, and that editions of this calculation published before July 1, 2011, do not utilize ZIP code data and are thus not strictly comparable. Sales Tax Rate Change Summary To: All retailers and servicepersons conducting business in taxing jurisdictions whose sales tax rate is changing, effective January 1, 2021 David Harris, Director Illinois Department of Revenue informational We weight these numbers according to Census 2010 population figures to give a sense of the prevalence of sales tax rates in a particular state. [11] For example, evidence suggests that Chicago-area consumers make major purchases in surrounding suburbs or online to avoid Chicago’s 10.25 percent sales tax rate. A narrow tax base is non-neutral and inefficient. [14] Len Lazarick, “Raise taxes, and they’ll move, constituents tell one delegate,” Marylandreporter.com, Aug. 3, 2011, http://marylandreporter.com/2011/08/03/raise-taxes-and-theyll-move-constituents-tell-one-delegate/. For over 80 years, our goal has remained the same: to improve lives through tax policies that lead to greater economic growth and opportunity. These rates can be substantial, so a state with a moderate statewide sales tax rate could actually have a very high combined state and local rate compared to other states. City Tax Tax Rate Exempt* Use Tax Service Fee Aspen (Sales Tax Extension) 2.40% 2.10% 2 W Contact City 3.30% 2,3 Colorado Springs (Sales Tax Decrease) 3.07% W Contact City None Denver (Tax Rate Increase) 4.81% 4 The increase, known as the Homelessness Resolution Tax, would raise Denver's local sales tax rate to 4.56% and result in a total rate of 8.56% after adding in regional and state sales tax. The five states with the lowest average combined rates are Alaska (1.76 percent), Hawaii (4.44 percent), Wyoming (5.33 percent), Wisconsin (5.43 percent), and Maine (5.50 percent). The five states with the highest average combined state and local sales tax rates are Tennessee (9.55 percent), Louisiana (9.52 percent), Arkansas (9.51 percent), Washington (9.23 percent), and Alabama (9.22 percent). Even though Colorado Springs saw a local sales tax decrease from 3.12 to 3.07 percent,[9] a Denver increase raised the state’s overall local average. The CO sales tax applicable to the sale of cars, boats, and real estate sales may also vary by jurisdiction. The Denver Revised Municipal Code (DRMC) imposes a 4.81% sales tax on the purchase price paid or charged on retail sales including retail sales made online to Denver customers, leases, or rentals of taxable tangible personal Washington, DC 20005, Tax Expenditures, Credits, and Deductions, Small Business, Pass-throughs, and Non-profits, Research & Analysis of Digital Tax Policies, Sources of Government Revenue in the OECD, Opportunities for Pro-Growth Tax Reform in Austria, Tax Proposals, Comparisons, and the Economy, Combined State and Local Sales Tax Rates (Map), The Role of Competition in Setting Sales Tax Rates, Sales Tax Bases: The Other Half of the Equation, https://taxfoundation.org/2020-ballot-measure-election-results/, https://www.dfa.arkansas.gov/excise-tax/sales-and-use-tax/recent-changes-for-local-taxes, https://dor.mo.gov/business/sales/taxcards/multiletter-jan.pdf, https://tax.ohio.gov/static/ohiotaxalert/archivedalerts/taxratechange73120.pdf, https://coloradosprings.gov/sales-tax/alert/sales-and-use-tax-rate-change-effective-112021, https://www.coloradopolitics.com/2020-election/election-2020-denver-voters-approve-pair-of-sales-tax-increases-to-fight-climate-change-tackle/article_03d80448-1e36-11eb-bd26-cfcd2a8f28ac.html, http://rri.wvu.edu/wp-content/uploads/2012/11/Tosunwp2005-7.pdf, http://articles.chicagotribune.com/2008-07-20/business/0807190001_1_sales-tax-tax-avoidance-tax-landscape, http://www.documentcloud.org/documents/603373-the-unintended-consequences-of-public-policy.html, http://marylandreporter.com/2011/08/03/raise-taxes-and-theyll-move-constituents-tell-one-delegate/, https://taxfoundation.org/2021-state-business-tax-climate-index/, http://taxfoundation.org/blog/how-does-your-state-sales-tax-see-blue-and-black-or-white-and-gold-dress, http://mercatus.org/publication/primer-state-and-local-tax-policy-trade-offs-among-tax-instruments, https://taxfoundation.org/publications/facts-and-figures/. Retail sales taxes are one of the more transparent ways to collect tax revenue. It has both home rule and state-collected sales tax jurisdictions. Research indicates that consumers can and do leave high-tax areas to make major purchases in low-tax areas, such as from cities to suburbs. [1] Special taxes in Montana’s resort areas are not included in our analysis. Combined with the state sales tax, the highest sales tax rate in Colorado is 11.2% in the city of Winter Park . getty The Internal Revenue Service (IRS) has announced the annual inflation adjustments for the tax year 2021, including tax rate schedules, tax tables and cost-of-living adjustments. (a) City, county and municipal rates vary. This shift can be traced back to Kansas City increasing its fire protection sales tax by 0.25 percentage points and Platte and Butler counties levying new 0.25 percent sales taxes to support law enforcement. The combined amount will be 8.20%, broken out as follows: (c) The sales taxes in Hawaii, New Mexico, and South Dakota have broad bases that include many business-to-business services. Colorado allows cities and counties to collect additional local sales taxes on top of the Colorado sales tax - Denver, for example, has a sales tax of 3.62% on tangible items and Falcon, Colorado is subject to an additional 1% county sales tax. [16], Tax experts generally recommend that sales taxes apply to all final retail sales of goods and services but not intermediate business-to-business transactions in the production chain. Colorado doesn't collect sales tax on purchases of most prescription drugs and groceries. 2021 State Sales Tax Rates California has the highest state-level sales tax rate, at 7.25 percent. In some states, items like alcohol and prepared food (including restaurant meals and some premade supermarket items) are charged at a higher sales tax rate. Because of this, some sources will describe California’s sales tax as 6.0 percent. Our work depends on support from members of the public like you. Home-rule jurisdictions can establish their own tax laws and enforce them via audit. If you need to download Colorado local sales tax rates, visit the Colorado sales tax database download page. Sales Tax Rate Change Summary To: All retailers and servicepersons conducting business in taxing jurisdictions whose sales tax rate is changing, effective January 1, 2021 David Harris, Director Illinois Department of Revenue informational FY 2021-11 Denver, Colorado, Ballot Measure 2B, Sales Tax to Fund Housing and Homeless Services and TABOR Spending Limit Increase (November 2020) A "yes" vote supported authorizing the city and county of Denver to levy an additional 0.25% sales tax generating an estimated $40 million per year to fund housing and homeless services, thereby increasing the total sales tax rate in Denver from 8.31% … Sales tax rates differ by state, but sales tax bases also impact how much revenue is collected from a tax and how the tax affects the economy. Denver. Most of Denver is located in a special tax district which collects an additional 1.2% sales tax (broken up into the Regional Transportation District at 1%, Scientific and Cultural Facilities District at 0.1%, and the Metropolitan Football Stadium District tax at 0.1%). See also T. Randolph Beard, Paula A. Gant, and Richard P. Saba, “Border-Crossing Sales, Tax Avoidance, and State Tax Policies: An Application to Alcohol,” Southern Economic Journal 64:1 (July 1997), 293-306. We represent this anomaly as a negative 0.03 percent statewide average local rate (adjusting for population as described in the methodology section below), and the combined rate reflects this subtraction. PDF Version; 01/2021 - 03/2021 - PDF: Statewide sales/use tax rates for the period beginning January, 2021 [8] Ohio Department of Taxation, “Sales and Use Tax Rate Changes effective October 1, 2020,” https://tax.ohio.gov/static/ohiotaxalert/archivedalerts/taxratechange73120.pdf. "Beginning [on January 1, four voter-approved sales-tax measures took effect in Denver," she says. DENVER – Colorado voted to pass Proposition 116, which cuts the state income tax rate from 4.63% to 4.55% and will reduce the state’s revenue by millions in the midst of a recession. For Denver, that means raising the sales tax to 8.56% from 8.31% to support green projects in the city. Sales and use tax compliance in Colorado is notoriously complex because the state allows home rule. Losing an event that draws more than 700,000 visitors from 42 states and 35 countries hurts in many ways, but the City of Denver’s tax coffers will undoubtedly feel the loss of the 2021 National Western Stock Show most acutely. Five states follow with 4 percent rates: Alabama, Georgia, Hawaii, New York, and Wyoming. Click here for a larger sales tax map, or here for a sales tax table. Denver, NC Sales Tax Rate Denver, NC Sales Tax Rate The current total local sales tax rate in Denver, NC is 7.000%. Four states tie for the second-highest statewide rate, at 7 percent: Indiana, Mississippi, Rhode Island, and Tennessee. Suite 950 These rates are weighted by population to compute an average local tax rate. For our purposes, ZIP codes that do not have a corresponding ZCTA population figure are omitted from calculations. [11] Mehmet Serkan Tosun and Mark Skidmore, “Cross-Border Shopping and the Sales Tax: A Reexamination of Food Purchases in West Virginia,” Research Paper 2005-7, Regional Research Institute, West Virginia University, September 2005, http://rri.wvu.edu/wp-content/uploads/2012/11/Tosunwp2005-7.pdf. New Jersey’s local score is represented as a negative. Colorado allows counties and cities to collect a maximum local sales tax of 4.20% on all non-exempt purchases within their jurisdiction. The money raised would be divided among six categories covering a range of environmental issues. Local sales taxes are collected in 38 states. Table 22, Tax Foundation, Feb. 13, 2020, https://taxfoundation.org/publications/facts-and-figures/. For instance, most states exempt groceries from the sales tax, others tax groceries at a limited rate, and still others tax groceries at the same rate as all other products. "We will use the sales tax to fund the programs we talked about.” Help us continue our work by making a tax-deductible gift today. TAX GUIDE. [15] For a list, see Jared Walczak and Janelle Cammenga, 2021 State Business Tax Climate Index, Tax Foundation, Oct. 21, 2020, https://taxfoundation.org/2021-state-business-tax-climate-index/. [12], At the statewide level, businesses sometimes locate just outside the borders of high sales-tax areas to avoid being subjected to their rates. DENVER – Colorado voted to pass Proposition 116, which cuts the state income tax rate from 4.63% to 4.55% and will reduce the state’s revenue by millions in the midst of a recession. [5] Jared Walczak, “Results of 2020 State and Local Tax Ballot Measures,” Tax Foundation, Nov. 3, 2020, https://taxfoundation.org/2020-ballot-measure-election-results/. DENVER — Denver voters have approved a 0.25 percent sales tax increase to pay for aid and resources for the city’s homeless population. To lookup the sales tax due on any purchase, use our Colorado sales tax calculator. For tax rates in other cities, see Colorado sales taxes by city and county . 2021 Colorado state sales tax Exact tax amount may vary for different items The Colorado state sales tax rate is 2.9%, and the average CO sales tax after local surtaxes is 7.44%. For weeks, ballots have flooded in against a backdrop of wildfires ravaging the state and a pandemic exacerbating the city's decades-long homelessness crisis. Special sales taxes are also collected on rental cars, food, and beverages. THE FOLLOWING ARE THE VARIOUS SALES TAX RATES THAT ARE IN EFFECT IN DOUGLAS COUNTY AS OF JANUARY 1, 2021 (updated 12/29/20) This is only a partial list of major subdivisions located in Douglas County, and is for informational purposes only. 32 - 1 of 2 City and County of Denver, Colorado TAX GUIDE Topic No. If you buy goods and are not charged the Colorado Sales Tax by the retailer, such as with online and out-of-state purchases, you are supposed to pay the 2.9% sales tax (less any foreign sales tax paid) for these items yourself as the Colorado Use Tax. Five states do not have statewide sales taxes: Alaska, Delaware, Montana, New Hampshire, and Oregon. The lowest non-zero state-level sales tax is in Colorado, which has a rate of 2.9 percent. Best Deals From www.avalara.com The Denver sales tax rate is 4.31%. The following cities have abolished the additional city sales and use tax for Municipal Street Maintenance and Repair: City/County Name Local Code Local Rate Total Rate; Corinth (Denton Co) A special tax rate of 4.00% is imposed upon food and drink not exempted under Denver Revised Municipal Code Sections 53-26 and 53-97. The five states with the highest average combined state and local sales tax rates are Tennessee (9.55 percent), Louisiana (9.52 percent), Arkansas (9.51 percent), Washington (9.23 percent), and Alabama (9.22 percent). Table 1 provides a full state-by-state listing of state and local sales tax rates. You can find local sales tax rates on our list of Colorado local sales taxes by county, city, and zip code, or you can lookup your local sales tax rates with our free Colorado sales tax lookup tool. Subject: LOCAL TAX CHANGES – EFFECTIVE January 1, 2021 (Continued) County Tax Tax Rate Exempt* Use Tax Service Fee Adams (Sales Tax Extension) 0.75% A-B-C-D-E-G -H -K None None Fremont (Sales Tax Extension) 2.50% A-B-C-D-E-G -H -K -M 2.50% 3.33% [18] For a representative list, see Jared Walczak and Janelle Cammenga, 2021 State Business Tax Climate Index. If approved, it would take effect on Jan. 1, 2021. The 0.62% road repair, maintenance, and improvements tax will expire five years from the date of implementation and will apply to all transactions that are currently taxable under the City Sale sand Use Tax Code. Would you consider telling us more about how we can do better? Denver Water offers many options for paying your bill. As a 501(c)(3) nonprofit, we depend on the generosity of individuals like you. Denver’s total sales tax rate is jumping to 8.81% next year in the name of resolving homelessness and curbing climate change, voters have decided. [9] ColoradoSprings.Gov, “Sales and Use Tax Rate Change Effective 1/1/2021,” https://coloradosprings.gov/sales-tax/alert/sales-and-use-tax-rate-change-effective-112021. A similar situation exists in Utah and Virginia. This rate includes any state, county, city, and local sales taxes. Crittenden County takes some of the credit for this improvement, as it reduced its local rate from 2.75 to 1.75 percent. [2] This number includes mandatory add-on taxes which are collected by the state but distributed to local governments. [3], No state rates have changed since April 2019, when Utah’s state-collected rate increased from 5.95 percent to 6.1 percent. In 2021, the income limits for all tax brackets and all filers will be adjusted for inflation and will be as follows (Tables 1). The lowest non-zero state-level sales tax is in Colorado, which has a rate of 2.9 percent. Groceries and prescription drugs are exempt from the Colorado sales tax Colorado enacted its sales tax in 1935 and adopted its use tax in 1936. Please select a specific location in Missouri from the list below for specific Missouri Sales Tax Rates for each location in 2021 or calculate the Sales Tax now using the Missouri Sales Tax Calculator . [16] Liz Malm and Richard Borean, “How Does Your State Sales Tax See That Blue and Black (or White and Gold) Dress?” Tax Foundation, Feb. 27, 2015, http://taxfoundation.org/blog/how-does-your-state-sales-tax-see-blue-and-black-or-white-and-gold-dress. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. Each of the above special district taxes has numerous exemptions. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and global levels. In October, the Denver Board of Water Commissioners adopted rate changes to help pay for our new Lead Reduction Program that launched in January 2020. The combined amount will be 8.20%, broken out as 2020 rates included for use while preparing your income tax deduction. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. New water rates start Jan. 1. These omissions result in some amount of inexactitude but overall do not have a palpable effect on resultant averages because proximate ZIP code areas which do have ZCTA population numbers capture the tax rate of those jurisdictions. [19] This base is far wider than the national median, where the sales tax applies to 34.25 percent of personal income.[20]. The December 2019 total local sales tax rate was also 7.000%. California has the highest state-level sales tax rate, at 7.25 percent. So, whilst the Sales Tax Rate in Missouri is 4.23%, you can actually pay anywhere between 4.73% and 9.61% depending on the local sales tax rate applied in the municipality. Effective January 1, 2021 City Sales and Use Tax. [6], Missouri moved in the opposite direction, going from 13th to 12th highest. This is done because a surprisingly large number of ZIP codes do not actually have any residents. Tax-Rates.org provides free access to tax rates, calculators, and more. The lowest The Tax Foundation works hard to provide insightful tax policy analysis. 32. [10] Alayna Alvarez, “Denver voters approve pair of sales tax increases to fight climate change, tackle homelessness,” Colorado Politics, Nov. 3, 2020, https://www.coloradopolitics.com/2020-election/election-2020-denver-voters-approve-pair-of-sales-tax-increases-to-fight-climate-change-tackle/article_03d80448-1e36-11eb-bd26-cfcd2a8f28ac.html. Denver Issue 2A: Climate sales tax Proposed tax would charge shoppers an extra 2.5 cents on every $10 purchase Share this: Click to share on Facebook (Opens … A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. Janelle Cammenga is a Policy Analyst with the Tax Foundation’s Center for State Tax Policy. The combined amount will be 8.20%, broken out as follows: 3.07% City of Colorado Springs (self collected) General Fund 2.00% Changes to tax rates effective January 1, 2021 Specific Changes Location County/City Code Rate Notes Tax Type Morgan City 15-007 0.25% * Highways Tax Military Rec - Park City 22-300 15.00% * MIDA Accommodations Tax Military Rec - Wasatch 26-300 15.00% * MIDA Accommodations Tax It should also be noted that while the Census Bureau reports population data using a five-digit identifier that looks much like a ZIP code, this is actually what is called a ZIP Code Tabulation Area (ZCTA), which attempts to create a geographical area associated with a given ZIP code. 2021 State Sales Tax Rates. Forty-five states and the District of Columbia collect statewide sales taxes. Denver, Colorado Sales Tax Rate - Avalara. To review the rules in Colorado, visit our state-by-state guide. The 2018 United States Supreme Court decision in South Dakota v. Wayfair, Inc. has impacted many state nexus laws and sales tax collection requirements. Of these, Alaska allows localities to charge local sales taxes.[1]. (d) Special taxes in local resort areas are not counted here. [17] Despite agreement in theory, the application of most state sales taxes is far from this ideal. One study shows that per capita sales in border counties in sales tax-free New Hampshire have tripled since the late 1950s, while per capita sales in border counties in Vermont have remained stagnant. The Tax Foundation is the nation’s leading independent tax policy nonprofit. 32 . Climate activists hope to capitalize on Denver’s recent passage of a sales tax meant to fund renewable energy programs by … Sources: Sales Tax Clearinghouse; Tax Foundation calculations; State Revenue Department websites. If you are a Colorado business owner, you can learn more about how to collect and file your Colorado sales tax return at the 2021 Colorado Sales Tax Handbook . In most states, necessities such as groceries, clothes, and drugs are exempted from the sales tax or charged at a lower sales tax rate. The Colorado sales tax rate is currently %. Of the thirty four countries tracked, sixteen have a higher maximum VAT rate then Greece.Countries with similar VAT rates include Austria with a VAT of 20%, … Your are expected to voluntarily list your liable purchases on a Colorado Use Tax Return, which should be attached with payment to your Colorado Income Tax Return. “We got the sales tax so we’re going to adopt a no-new-revenue rate for the property side for fiscal 2021," Bowerman said. This report provides a population-weighted average of local sales taxes as of January 1, 2021, to give a sense of the average local rate for each state. (e) Salem County, N.J., is not subject to the statewide sales tax rate and collects a local rate of 3.3125%. The local sales tax is collected in addition to the Colorado sales tax of 2.9%, so the actual sales tax you pay on purchases in Colorado may vary between 2.9% and 7.100% depending on which county or city the sale is made in. We include these in their state sales tax. A special tax rate of 4.00% is imposed upon food and drink not exempted under Denver Revised Municipal Code Sections 53-26 and 53-97. The Colorado state sales tax rate is 2.9%, and the average CO sales tax after local surtaxes is 7.44%. (b) Three states levy mandatory, statewide, local add-on sales taxes at the state level: California (1%), Utah (1.25%), and Virginia (1%). In addition to state-level sales taxes, consumers also face local sales taxes in 38 states. [13] At one time, Delaware actually used its highway welcome sign to remind motorists that Delaware is the “Home of Tax-Free Shopping.”[14]. Effective January 1, 2021, the City of Colorado Springs sales and use tax rate will decrease from 3.12% to 3.07% for all transactions occurring on or after that date. This is the total of state, county and city sales tax rates. FOOD AND DRINK. Most states whose rankings improved (California, Iowa, Nevada, South Dakota, and Utah) did so only in comparison to those that enacted more substantial local rate increases. The tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. Sales tax exemption forms (as well as business sales tax id applications, sales tax returns, and the full Colorado sales tax code) can be downloaded from the Colorado Department of Revenue here . [18], Hawaii has the broadest sales tax in the United States, but it taxes many products multiple times and, by one estimate, ultimately taxes 105 percent of the state’s personal income. 2021 Sales/Use Tax Rate Tables PDF Version 01/2021 - 03/2021 - PDF Statewide sales/use tax rates for the period beginning January, 2021 XLS Versions 01/2021 - 03/2021 - XLS Statewide sales/use tax … In some cases, they can rival or even exceed state rates. Last updated January 2021 Car dealers have special sales tax rates for nonresident purchasers IF they fill out a DR-123 form. In the long-term, the United Arab Emirates Sales Tax Rate - VAT is projected to trend around 5.00 percent in 2021, according to our econometric models. City and County of Denver, Colorado. Four states tie for the second-highest statewide rate, at 7 percent: Indiana, Mississippi, Rhode Island, and Tennessee. There is no applicable county tax. On November 3, 2015, Colorado Springs voters approved a sales and use tax rate increase of 0.62% to fund road repair, maintenance and improvements. The five states with the highest average local sales tax rates are Alabama (5.22 percent), Louisiana (5.07 percent), Colorado (4.75 percent), New York (4.52 percent), and Oklahoma (4.45 percent). [15] Some states exempt clothing or tax it at a reduced rate. "These changes will take the city’s sales-tax rate … Sales Tax Clearinghouse publishes quarterly sales tax data at the state, county, and city levels by ZIP code. Denmark's VAT rate of 25% ranks as one of the ten highest VAT rates in the world.Countries with similar VAT rates include Iceland with a VAT of 26%. [17] Justin M. Ross, “A Primer on State and Local Tax Policy: Trade-Offs among Tax Instruments,” Mercatus Center at George Mason University, Feb. 25, 2014, http://mercatus.org/publication/primer-state-and-local-tax-policy-trade-offs-among-tax-instruments. 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