New Tax on Postal Services

New tax on service

Value added taxes (VAT) are a common occurrence in many countries. Similar to sales taxes, a VAT is collected on the sale of goods that is ultimately paid for by the end consumer. Unlike sales taxes, however, value added taxes are paid along each step in the supply chain as goods are sold to the next link. With a newly introduced government regulation, one Postal Service is now required to charge a value added tax for the services it provides.

Last September, the Kenyan government expanded the application of its VAT to include previously untaxed items such as milk, bread and fertilizer in order to expand its revenue base. Also included in that list are the mailing services of the Postal Corporation of Kenya.

More commonly known as Posta Kenya, prices for the postal organization have increased by 16 percent as a result of the VAT. Though the price of sending a First-Class equivalent piece of mail within the country has risen to 41 cents, it still remains less than most other postal organizations throughout the world. Despite this relatively low cost to mail a letter within Kenya, such a large increase on products and services could to have an adverse impact on a nation where 46 percent of the population is at or beneath the poverty line.

Do you think USPS might eventually be forced to charge a sales tax if the U.S. economy suffers additional precipitous declines such as the one in 2008?

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2 Comments

  1. Phyllis.L.Isaacs@usps.gov

     /  March 31, 2014

    I seriously hope USPS is not forced to start charging a VAT, in order to boost the U. S. Treasury. We are already going broke “bailing out” Congress and the taxpayers, through our aggressive prepayment of future retiree health benefits and our overfunding of our CSRS and FERS retirement accounts. We are supposed to be a public service, not just another “cash cow” source of revenues for the Government.

  2. PO Clerk

     /  April 1, 2014

    Oh my Gosh, I certainly hope that we don’t have to charge a VAT. I completely agree with what Phyllis said. And I do not think the public will be behind it at all.

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