Larry wrote:
Dave wrote in
:
On Fri, 14 Mar 2008 15:30:53 +0000, Larry said:
VAT is piled
upon EVERY link in the money exchange chain from the mine to the
consumer, multiplying its real percentage into the price the consumer
pays many times over.
So, Larry, you think that if the VAT rate is 20%, and I buy parts for
$.80 and resell the assembled product for $1.00, I'm going to have to
collect and pay over to the guvmint $.20 in VAT?
Rolled into the price outside the USA. Every point on the chain from when
they dig it out of the ground where money changes hands, VAT is added and
rolled into the price when it goes up the chain.....

I had hoped someone better versed in economics in general
and VAT in particular would correct this false premise - but
see that I will just have to step in ...

Each registered business does indeed pay VAT on its stage of
a product's path to final sale to the consumer but each
business is able to claim that payment back once it leaves
for the next stage, so in practice no payment is made.
Therefore, that payment is not reflected in the product's
cost of production, only the consumer pays the final VAT,
making it similar to a normal sales tax.

I have been reliably informed by those who understand these
things that this is the most equitable form of taxation that
is difficult to evade, although invoking a bureaucratic
overhead.

HTH.
BrianH.