Girl Scout Cookies and the Snack

Memorandum
To: TAXATION BUREAU Date: April ,2018
From: Budget Manager
Subject: COMPANY COMPARISON
The government receives revenues in the form of taxes from businesses and individuals. The tax departments have specific charges that may be reviewed when they fail to hit the target. An increase in the level of taxation may appear as an easy way of increasing the amount of taxes. However, various factors need to be carefully evaluated to make sure this is a success. This includes items such as the elasticity of demand and the impact of the legislation on the price of the product. Maine is faced with problems of insufficient revenues and may consider relooking at the tax policy. This memo is a case study of the various options that Maine may consider and their implication.
Maine may consider doing nothing and maintaining the status quo. This implies that the snack food will continue being classified amongst the sales of grocery staples. This category is exempted from taxation hence the authority will fail to increase its revenues. The tax policy is fair as the various institutions and individuals are taxed at a similar rate. The overall snack tax will amount to zero in that fiscal year.
Direct the Bureau to rewrite the instruction may seem the best idea. There would be a reclassification of the snacks and would yield a tax totalling to $10 million annually. However, the tax burden is likely to be passed on to the final consumer.

As a result, the prices of snacks is expected to increase. An economic effect is evident as Abnaki raised its cookie prices from $2.25 to $2.50. This will cause a decrease in the number of sales of the Snacks.
Repeal the snack tax would increase its rate from 6% to 7%. This is likely to increase the revenues generated by the bureau. However, the changes are likely to receive opposition from the lobby groups as some of the non-governmental organizations use the snacks. This adheres to the collectability policy.
The authority may also choose to exempt the sales and purchases by the Girls Scouts and similar organizations. Such organizations receive between 60-65% of their revenues from the sales of the cookies. The 2% of the revenues or $58,000 will be remitted in the form of taxes. Consequently, the profits made by the organizations will decrease slightly hence they will be forced to seek alternative ways of donation and funds.
The bureau may require Girl scouts to register as a retail merchant. They will have to collect the sales tax on the cookies. This will result in the business increasing the price of the snacks due to the increase in taxation. Some of the organizations like Kennebec may take time to respond to this. Consequently, they will maintain the same cookie prices and pay the taxes out of their revenues. This shrinks their profit level of such organizations.
The sales and purchases made by the charitable organizations may be exempted from the taxes. This would be an ideal thing to do as such entities do not engage in commercial activities. However, the authority may lose the amount of taxes that would have been paid by these organizations.
Recommendation
The snack tax is a brilliant way of increasing the amount of taxes paid. It not only enlarges the tax base but also diversifies the types of taxes. However, there is need to evaluate the impact of the new taxes on both the commercial and non-commercial organizations. There is need to bring on broad the various stakeholder’s. This will facilitate the understanding of the tax and its requirements. I would recommend the rewriting of the instruction and the exemption of the Girls Scout organizations from the taxes.