Introduction
Value added tax (VAT), or goods and services tax (GST), is a consumption tax levied on value added. 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).
Exports by definition, are consumed abroad and are usually not subject to VAT; VAT charged under such circumstances is usually refundable. This avoids downward pressure on exports and ultimately export derived revenue.
A VAT is an indirect tax, in that the tax is collected from someone who does not bear the entire cost of the tax.
VAT was invented by a French economist in 1954 as taxe sur la valeur ajoutée (TVA in French). Maurice Lauré, joint director of the French tax authority, the Direction générale des impôts, was first to introduce VAT with effect from 10 April 1954 for large businesses, and it was extended over time to all business sectors. In France, it is the most important source of state finance, accounting for approximately 45% of state revenues.
Personal end-consumers of products and services cannot recover VAT on purchases, but businesses are able to recover VAT on the materials and services that they buy to make further supplies or services directly or indirectly sold to end-users. In this way, the total tax levied at each stage in the economic chain of supply is a constant fraction of the value added by a business to its products, and most of the cost of collecting the tax is borne by business, rather than by the state. VAT was invented because very high sales taxes and tariffs encourage cheating and smuggling. It has been criticized on the grounds that (like other consumption taxes) it is a regressive tax.
Comparison with a Sales Tax
Value added taxation avoids the cascade effect of sales tax by only taxing the value added at each stage of production. Value added taxation has been gaining favour over traditional sales taxes worldwide. In principle, value added taxes apply to all commercial activities involving the production and distribution of goods and the provision of services. VAT is assessed and collected on the value added to goods in each business transaction. Under this concept the government is paid tax on the gross margin of each transaction. VAT proposes to replace
After the construction of the newly ratified Constitution, one of the heaviest economic duty was the the inherited debt from the revolutionary war with Great Britain. In order to help relieve these debts, a collective and protective tariff was created in order to help the Federal government collect revenue in order to pay off the debt. The tariff taxed goods imported into the United States from any foreign nations, in example the tax would charge 10 cents per gallon of wine, and so on with other goods imported. Forward with the goal of paying off debt, the taxes were also linked in protecting American manufacturers from foreign competition. After the war a great deal of the American market relied on imported British seeing to the lack of domestic
Almost every purchasable good has a sales tax, but some specific goods deemed as necessities and are exempt from this tax. (Hawkins) Ideally, all goods would have sales tax without regards to whether
the example of taxation which is the first of its kind on this particular product. The author is
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Taxation has always been a major controversy. Just like any major corporation, the government is constantly looking to raise revenue. The easiest and fairest way to do this is by taxing the people. However, how the people will be taxed is always an issue.
The use of taxes is one of the government's favorite ways to make its presence known in the economy. While this method seems blatantly obvious, many of the ways the government uses the money collected by taxation is not. Some of the money it takes is used to fund other programs designed to "protect" consumers and to "create" jobs. Be...
Economically, he forged France's economy out from the fire of revolution. Napoleon recognized that economic reform was essential to increase employment and restore confidence in the government's ability to foster economic growth. In 1800 he established the Bank of France. Modeled after the Bank of England, it was used to promote industry. As a result, the franc became the most stable currency in Europe. The Bank of France proved to be significant in the stabilization of the economy. This stabilization was necessary to be able to increase income and ensure the security of the nation. Furthermore, Napoleon refined tax collection by demanding 5% of every citizen's income and there were no tax exemptions based on class. Hundreds of officials were appointed to collect taxes on income and property. In 1880, 660 million francs were collected, exceedingly more than pre-revolutionary times. With more income, the government could spend on various social programs for the people.
The four types of taxes this paper will discuss are income tax, sales tax, property tax, and user fees. Income tax was not permanently established until the 16th Amendment was passed in 1913. Most federal taxes had been previously derived from excise taxes on tobacco and alcohol and other consumer goods. The US Constitution, when written and still continues to, legitimize taxation in the United States through Article I, Section 8, that Congress has the power to lay and collect taxes, duties et al, pay the debts or provide for the common defense and general welfare of the United States (Cornell Law LII). Investopedia defines income tax as ‘a tax government(s) impose on financial income generated by all entities within their jurisdictions (Investopedia, 2014). Businesses and individuals are required to file an income tax return every year to determine if they owe taxes or qualify for a refund. That is determined by measuring the total income one earns to a designated tax rate, calculating one’s taxable income, which are some or all items of income reduced by other adjustments or expenses in that tax year. There are different subcategories of income tax; there is a federal income tax that is set by the federal government, apart from a few states, there is a state income tax that is imposed on their respective residents, as well as the possibility of there being local income tax ...
Exporting is the commercial activity of selling and shipping a good or goods to a foreign country. Importing is the commercial activity of buying and bringing in goods from a foreign country. The benefits of exporting and importing are good to a countries economy as it creates local jobs. The Honda plant in Alliston exports the Honda Civic (a three door hatchback and four-door sedan) as well it is the only facility in the world that builds the full-size Odyssey minivan and the Acura MDX sport utility vehicle.
V represents Value Added - interventions should increase the worth of the situation for the internal organization or external client.
The term export can be defined as a means of shipping goods and services from a countries port also known as selling goods from ones country to other countries or other markets overseas. Export strategy is a way in a company sets its rule of operation in the export business helping it to achieve the objectives set. With an export strategy a company will be able to will clearly define its raw materials, finances and the personnel to help it achieve its goals. It helps a company to provide quality services to the customers both new and old helping also to deal with service providers. The company will emerge as well organized one with clear goals and strategies to attain the goals. (Foley, J. F. 2004:22).
Only Final Goods Ought to be Taxed, And Typically They Ought To be Taxed Uniformly:….
Dongwon Lee, Dongil Kim, and Thomas E. Borcherding(2013) pointed out that countries from the Organization for Economic Co-operation and Development (OECD) collect about 32 percent of their total revenue from VATs and 27 percent from personal income. According to the Figure 1, most of OECD countries relied a lot on the VAT, the VAT proportion of total tax revenue varies from 10% to 38%. Therefore, for a lot OECD countries, the VAT is really important.
Value Added Tax or VAT as it is called is the most common alternative strategy implemented by many countries to deal with inefficiencies within the tax system. VAT provides an opportunity to modernize the indirect tax system, to make it more efficient, appropriate and simpler.
It is an indirect tax associated on the utilization of most goods and services. VAT is imposed by VAT-enrolled organizations that supply good and services in the course or advancement of their business. VAT is also appropriate on the import of goods. VAT is imposed at each phase in the production network and is gathered by organizations for the benefit of the government. VAT is at last brought about and paid by the end consumer.