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Originally Posted by herbdb
The VAT is a regressive tax like our US and Canadian sales taxes.
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From a consumer pov, sales tax and vat look the same. But the concept is quite different, especially for businesses.
Quote:
Originally Posted by frozennorth
(...) Same with vat. There's no value added to the product.
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Not true for a business. If there is no added value, incoming vat = outcoming vat, no extra tax.
Quote:
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Value added tax (VAT), or goods and services tax (GST) is a consumption tax levied on any value that is added to a product. In contrast to sales tax, VAT is neutral with respect to the number of passages that there are between the producer and the final consumer; where sales tax is levied on total value at each stage, the result is a cascade (downstream taxes levied on upstream taxes).
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Source:
http://en.wikipedia.org/wiki/Value_added_tax