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Originally Posted by JSWolf
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Good, you finally understand how things work. Sales tax in the US is added to the finished product. Raw materials are usually tax exempt even if the finished product has a sales tax. The VAT system does not tax based on finished product sales price, but merely on the value added in each step of manufacturing including the final sale to the consumer. Value added is basically the same as labor costs or profit margin. 20% VAT as it was in the UK does not mean that Amazon has to pay 20% in taxes, they only pay 20% on their profit. Or rather they did. It is more correct to compare VAT to income tax rather than sales tax.
The UK reduced VAT, or income tax on the producer chain. It is meant to increase the profit margin in a struggling economy due to the pandemic. Even if they reduce the prices, it makes no difference that they are now all of a sudden have a higher profit margin.