VAT

One of the two dozen candidates for president must come up with the value added tax (VAT). Many countries including Canada and the European Union have such a tax. It is a tax that is paid along the supply chain. For example, a company purchases raw materials and pays a tax which goes to the government. The materials are used to make parts and when these are sold a tax is paid to the government. These parts are then sold to a cell phone maker and a tax is paid and paid to the government. Finally the cell phone is sold to the consumer and a tax is paid and sent to the government. The final tax is seen by the consumer as like a sales tax but it is much smaller than if the total tax were tacked on at the end. In Germany the VAT is 19% but some items like food are exempt to make it more progressive.