- Most important tax in most welfare states regarding revenue
- especially in Europe
- even larger tax income for states than Income Tax
- harmonized vs disharmonized
- harmonized within EU (except for VAT tax rate)
- USA has no harmonized VAT
- all budgetary problems would be solved
- keeping economy in balance via printing USD
- most countries would be bankrupt technically
Success Story of VAT
- sign of rising wealth
- immense overall wealth level after WW2 compared to during that time
- world full of luxuries (luxuries are taxed)
- tax on consumption (who consumes more, pays more taxes)
- VAT started off in Europe (France invented it (not really))
- payed when?
- every time something is payed
How much where?
- Austria 20% (or 10% or 13%)
- Hungary 27% (highest)
- Croatia, Sweden (25%)
- Switzerland 8.1%
- USA 0% (state dependent)
Finances
- sales tax accumulates with every step (first step is taxed (n-1) times, second step is taxed (n-2) times, etc)
- VAT is actually taxed only at the last production step when going towards the consumer
- Tax on the consumer
- Not part of Revenue or Expenses (not effect on profit)
- (stays out of P/L) (Just effecting Operating CF)