To Tax or Not to Tax?

Let's face it - tax is a pretty contentious issue. Most people love to hate taxes, and many try to run away from (evade) them (which I believe is a felony).

At any rate, in business you do have to pay taxes. Taxes are sometimes imposed per head on goods you produce, or sometimes they are generally applied to your income from sales of your products.

Regardless of the form the tax takes, you decide how best to handle it. When faced with taxation, a business has 2 choices:

1. Transfer the tax to the consumer and let them bear the cost (by raising shelf prices); or

2. Bear the tax and lose money (profit)

It's a little like dancing with wolves because you get hurt either way (unless you're the big bad wolf in your industry). Here's how:

Transferring the tax means you'll have to raise prices - consumers won't like it, and you could lose your following significantly unless you're sort of running a monopoly and your product is that good.

Bearing the tax means you have to cut your profits - hey, but at least your customers are happy.

I guess its a case of between the devil and the deep blue sea - I can swim so I'm sure you know which one I'd go for.

Until next time,

Cheers.

M.