We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
thud ... By "here" do you mean England, or Canada? It would seem to me that VAT "evasion" would quickly become a necessity, wherever it is in effect. Sales taxes are sometimes a nasty shock to prospective purchasers, but when you are buying a complicated piece of equipment, like a car or a generator, each separate piece which is assembled into the finished product is VAT'd, leaving the purchaser with a huge amount of hidden taxes for the final product. Which is why corrupt politicians are so attracted to the VAT, and why wise taxpayers dread it.
The VAT does not accumulate throughout the manufacturing and retail chain. If you sell a product you collect VAT from the buyer, and you get a refund of the VAT you paid on the inputs. What you remit in the long run is the difference between the two. This is the value added of the "Value Added Tax". The consumer of course, pays the tax and gets no refund . ( Except for possible tax credits for the poor.)
The net tax paid is the amount the consumer pays. The reason for doing it this way, instead of just collecting a retail sales tax, is that it becomes self policing to a certain extent. If you don't collect from your customer you don't get your rebates. This built in protection against cheating is one of the reasons VATs are such effective revenue raisers.
The major exception to the rule, that you must collect from the customer to get the rebate, is for exporters. They do not have to collect from foreign buyers, and they can still get refunds for the tax paid on their inputs. The VAT is intended to tax citizens, not outsiders.
Incidentally the Europeans get around the nasty shock to the consumer by requiring that the tax be included in the sticker price. That is not the case here in Canada. We get reminded of it every time we pay for something. It is annoying, but at least we know what is happening to us.
Marianne...I was talking of England and I meant VAT paid mainly on services...everything from contractors to piano teachers,all of whom offer a two tier pricing system. Large scale fraud on VAT reclaiming is another subject that makes VAT a recipe for disaster,