Question

By law, sales tax has to be applied to the discount price. However, would it be better for the consumer if the 7.5% sales tax was calculated before the 20% discount was applied? Why or why not?

Apply Sales Tax First: Apply the discount first:

Answer 1

Answer:

let's say the item bought costs £20

sales tax first

20/100 X 7.5 = 1.50. 20 + 1.50 = 21.50

21.50/100 X 20 = 4.30

21.50 - 4.30 = £17.20

discount first

20/100 X 20 = 4

20 - 4 = 16

16/100 X 7.5 = 1.20

16 + 1.20 = £17.20

it wouldn't matter

Answer 2

No. Since there will be more of a fine, there will be more tax to take away. If the discount is taken first, then there will be less money to calculate the tax from. So tax before the discount would be worse, because it would cost more