In my country, my company has to pay 21% VAT. For a dollar in sales we have to add 21% in taxes. But we deduct the VAT paid, so if we had to buy stuff for 95 cents, we'd get back the VAT paid on that, resulting in having to pay taxes only on the difference, being 5 cents x 21%, approx 1 cent. Hence it being called "value added tax".
I think this is a better tax than income taxes because it taxes consumption, not labor (although if you do work to add value this does get taxed).
I think this is a better tax than income taxes because it taxes consumption, not labor (although if you do work to add value this does get taxed).