I meant that the 9 percent tax is included in the cost so that the manufacturer or whatever is not really paying the tax. The price to the next guy is then 9 percent higher before the 9 percent tax is even considered. Then the profit of the first guy is taxed 9 percent, but it is already on a falsely inflated price.
Then the next guy does the same thing.
Several other people have said this too. We all know increases are passed on to the consumer in a covert way. This principle would operate all along the chain, and would be compounded, with each hidden 9 percent being added to the cost of the next guy.
It’s something like rent control’s hidden cost to the tenant: Every two years you pay an increase in your rent, based on the previous rent, which includes all the other increases. It’s like compound interest on a savings account but in reverse.
The retail consumer gets scrooed the worst.
You described a VAT tax, our tax is to the final buyer the customer. Net profit is taxed as ordinary income or capitol gains.
If I produce a product, I do not charge a sales tax to the buyer (unless they are the end of the line), if they modify it they do not add tax to the buyer of the modified product, it is the final consumer who pays.
(OK, there may be portions of any given item produced that is taxed but it is small. An example in my own case, I was an electronic drafter, I was required to charge a 4% tax on the paper I drew on but nothing else)
COSTS (apples) are of course passed on in the form of price markup, by the upstream supplier to the next one downstream. Left to work its magic, free market competition incentivizes innovation and improvement to drive down costs and prices thus gaining more market share. There's always a pressure to push costs and prices down in freely competitive market. So the market itself, free from government interference excepting preventing illegal cartels and monopolies, deals effectively with costs and prices.
PURCHASE PRICES (oranges) are what the tax should be based on. I think this problem you speak of is easily solved by taxing the PURCHASE PRICE, not the costs, which are hard to discern and can be "hidden." Taxing the marked-up SALES price to the next customer down in the supply-chain stream seems pretty straightforward. By subtracting from the tax the PURCHASE price from the supplier upstream, it looks like effectively a single tax for the end item.