Which is exactly the point I am trying to make, without splitting hairs between the EU definition of value added, and our sales taxes in various locales.
Therefore I'll just write "sales tax," and we are in agreement, semantics aside..
Which is exactly the point I am trying to make, without splitting hairs between the EU definition of value added, and our sales taxes in various locales.
Therefore I'll just write "sales tax," and we are in agreement, semantics aside..
The difference between a retail sales tax and a VAT is fundamental, not merely splitting hairs. Thus leaves us at substantial disagreement in a very basic manner.
A retail sales tax is collected only an point of sale for final consumption and is fully visible being collected from the consumer/voter openly at point of sale. That is why government prefer the levy of income taxes and VATs the mechanics of which are mostly out of sight of the average citizen.
A VAT, unlike the retail sales tax, is imposed throughout the full chain of production operating on business purchases effecting the economy in profound manner throughout acting in a less visible and more insidious manner causing dislocations and problems throughout an economy.
Definition [ http://www.encyclopedia.com/articles/13330.html ]:
value-added tax
levy imposed on businesses at all levels of production of a good or service, and based on the increase in price, or value, added to the good or service by each level. Because all stages of a value-added tax are ultimately passed on to the consumer in the form of higher prices, it has been described as a hidden sales tax. Originally introduced in France (1954), it is now used by most W European countries.
That VATs main claim to fame is its capacity to extract revenues from an economy at much higher levels than other tax systems as it operates generally out of the view of the general population and provides endless opportunites for political machinations behind the curtain of commercial activity.
http://www.ncpa.org/pi/taxes/pdtx31.html
*** VAT is the most efficient tax ever devised, since it doesn't discourage production as much as other taxes that raise the same revenue. It is also nearly invisible and therefore easily raised.
The revenues from VAT have helped expand the welfare state. In 1965, government spending as a share of gross national product in Western Europe averaged 34.5 percent; but by 1993, spending had risen to 52.1 percent. Business welfare also expanded, with industrial subsidies at least four times as high in Europe as in the U.S. And for European workers, VAT helped create a poverty trap, as direct taxes discouraged work, and generous benefits cut the cost of not working. Source: Bruce Bartlett, "Shadow of VATman," National Review, March 25, 1996. |