Quote:
Originally Posted by Kostas
From a consumer pov, sales tax and vat look the same. But the concept is quite different, especially for businesses.
Not true for a business. If there is no added value, incoming vat = outcoming vat, no extra tax.
Source: http://en.wikipedia.org/wiki/Value_added_tax |
In the US, supplies used to produce products are purchased tax free; as are goods to be resold. The impact on the consumer is the same.
If you look at the "wiget" example in wikipedia you will see the total tax in the simple example is the same, but it is paid at different stages. In the end the consumer pays the same for his purchase and the taxing entity collects the same tax in both systems.