[Hostage]

Your examples show you are not knowledgeable about taxes nor about VATs.

You have a simplistic view. Let’s leave it at that.

[rb22982]

I'm extremely knowledgeable of them actually having worked as a mid level exec for a large retailer for a large number of years. But thanks for playing.

The equivalent in the US is tax exempt status for corporations for resale. For example, if I go into Costco today and buy Pepsi products, I'm going to pay a 7.75% sale tax where I live. However, if I was a business and plan to resell that Pepsi product at the Tennis and Swim Club that I own, I could not have to pay that Sales Tax at Costco. However, when I sold the product at retail at my Club, I collect a sales tax from my club members for 7.75%. In Europe, I'd pay the 7.75% (if the VAT was 7.75%) at Costco, and then when I collect 7.75% from my club members, I'd be able to reduce the amount I remit to the government by the 7.75% I already paid. The amount of total taxes paid is the same if the rates are the same. In the US, only the final consumer pays a sales tax while in Europe everyone pays a tax but gets a credit for the sale/VAT tax already paid (except the final buyer, of course).

[rb22982]

How does a VAT work anyway

"The example I always use is a loaf of bread you buy in a store for a buck -- so you have a farmer, a baker, and a supermarket along the production chain. Let's put the VAT at 10 percent.

1) The farmer grows the wheat and sells it to the baker for 20 cents. The VAT is 2 cents. The baker pays the farmer 22 cents, and the farmer sends 2 cents in VAT to the government.

2) The baker makes a loaf and sells it to the supermarket for 60 cents. The VAT is 6 cents. Now the supermarket pays the baker 66 cents, of which 6 is VAT. The baker sends the government 4 cents -- he pays 6 cents in VAT but receives a two cent credit from the government.

3) The store sells the loaf to me for a dollar. I pay $1.10. The store sends the government 4 cents total - the 10 cents it collected in VAT on its sales, minus the 6 cents it paid to the baker in VAT, which it gets back in a credit. In total, the government gets 2 cents from the farmer, 4 cents from baker, 4 cents from the store. That's 10 cents on a final sale of a dollar -- for a 10 percent VAT."

My note: again, this works out to be exactly the same amount of money remitted to the government as just a 10% sale tax collected at the very end.