by Bump » 7 Jul 2006 16:39
Every country has a form of tax on goods purchased at point of sale. The USA has both Federal and State tax as well as local taxes which just about add up to 15% in some states.
VAT replaced Purchase Tax, a variable means by which the government took a slice of "Luxury" items in order to control consumer spending. ie To influence the retail price of a commodity slap a tax on it so you could only buy it if you could really afford to pay the tax. Cars, housing and electrical goods were the main target and in doing so the government controlled inflation.
When we became a member of the EU, the higher rate of VAT was only supposed to be levied on "Luxury" goods, unfortunately this principle has been erroded and we now have 17.5% VAT on nearly everything; books, childrens clothes and medicines, I think are excluded for now.
Of course VAT is no longer an economists tool but simply another way of fleecing, oops! financing the working of the EU beurocracy and paying French farmers far more than they deserve. In practical terms the end user pays the VAT wether the provider is VAT registered or not as the trader loads the price to account for VAT one way or another. Raw commodities do not attract VAT nor do visitors from outside the EU, however, we make it as difficult as the US Treasury to reclaim VAT and many of out visitors go home having contributed hansomly to the Strasborg coffers.
You deny the treasury its taxes at your peril! There are only two things certain in life, Death and Taxes.
