> Note that, while a VAT is imposed at every stage of the process, the net effect is to apply the rate one time to the final sales price. The tax is collected in increments (on the “value added” at each stage), but unlike with a pyramiding sales tax, it does not double tax inputs. The VAT and ideal sales tax share an identical tax base and, if imposed at the same rates, yield identical collections.
The VAT is important in Europe, because if a product is manufactured in many countries, each of those countries gets a share of the tax revenue.
The VAT is important in Europe, because if a product is manufactured in many countries, each of those countries gets a share of the tax revenue.