Information on Value Added Tax

Posted on April 7, 2010. Filed under: General Info | Tags: , |

While several media outlets reported today on Paul Volcker’s statement Tuesday regarding the Value Added Tax, the most illuminating I found was that of the UK Telegraph which reported it this way:

The relentless drive by the Obama administration to undercut economic freedom in the United States continued yesterday with Paul Volcker’s call for the possible introduction of European-style value-added taxes as well as energy or carbon taxes. Volcker, the former Federal Reserve chief, is currently the most powerful economic adviser to the president after Treasury Secretary Timothy Geithner, and sits as the chairman of the president’s Economic Recovery Advisory Board.

This is not empty, throw away rhetoric, but a call to arms by an aggressively interventionist and uncompromisingly left-wing US administration that is actively seeking to refashion the United States in the image of the European Union, both in terms of foreign and economic policies.

Volcker made the remarks at the New York Historical Society, and his comments were picked up here by Reuters:

In addition to regulatory reform, Volcker said lawmakers would likely have to make some tough choices in the coming years to bring U.S. deficits under control and prevent inflationary pressure from building.

While highly unpopular, he said the United States should consider raising taxes and consider introducing a European-style value-added tax and perhaps an energy or carbon tax.

The value-added tax “was not as toxic an idea” as it has been in the past, he said, adding it may be necessary to fund entitlement costs and decrease U.S. deficits.

“If at the end of the day we need to raise taxes, we should raise taxes,” he said.

By building up staggering levels of debt – projected to rise by $12 trillion over the next decade according to the Congressional Budget Office – through a massive expansion of government spending, including universal health care, the Obama administration is digging itself into a massive hole with no light at the end of the tunnel. As Washington Post columnist Charles Krauthammer superbly put it in a recent article:

By introducing universal health care, he has pulled off the largest expansion of the welfare state in four decades. And the most expensive. Which is why all of the European Union has the VAT. Huge VATs. Germany: 19 percent. France and Italy: 20 percent. Most of Scandinavia: 25 percent.

Obama set out to be a consequential president, one on the order of Ronald Reagan. With the VAT, Obama’s triumph will be complete. He will have succeeded in reversing Reaganism. Liberals have long complained that Reagan’s strategy was to starve the (governmental) beast in order to shrink it: First, cut taxes; then, ultimately, you have to reduce government spending.

Obama’s strategy is exactly the opposite: Expand the beast, and then feed it. Spend first — which then forces taxation. Now that, with the institution of universal health care, we are becoming the full entitlement state, the beast will have to be fed.

I cannot think of any move by the US government that would be better designed to shed jobs, undercut small businesses, frighten foreign investment, and kill economic growth, than to raise taxes and build a climate of economic uncertainty. If Barack Obama wants a European-style tax system, he must also face the spectre of European-style levels of unemployment (as high as 20 percent in countries like Spain), capital flight out of US markets, and frightening levels of government bureaucracy.

I found the following information on Wikipedia and found it helpful:

Most states have a retail sales tax charged to the end buyer only. Unlike in the VAT, sales to other businesses are untaxed. State sales taxes range from 0%-13% and municipalities often add an additional tax in the form of a local sales tax. In many stores, the price tags and/or advertised prices do not include the taxes, and the taxes are added at the cash register before the customer pays. In some states, no sales tax is charged for services. (In many states, a use tax is imposed on items ordered online or bought in a lower or no sales tax state, and brought into the taxpayer’s home state). This is a key difference between most sales taxes levied throughout the United States and the value added tax system in many other countries.

In the United States, the state of Michigan used a form of VAT known as the “Single Business Tax” (SBT) as its form of general business taxation. It is the only state in the United States to have used a VAT. When it was adopted in 1975, it replaced seven business taxes, including a corporate income tax. On August 9, 2006, the Michigan Legislature approved voter-initiated legislation to repeal the Single Business Tax, which became effective January 1, 2009.

House Speaker Nancy Pelosi stated in October 2009 that a new, national VAT was “on the table” to help the federal government garner needed revenues,[10] After her speech, the Americans for Tax Reform group urged the public to contact their members of Congress to oppose this potential measure.

EU countries

Country   Standard rate   Reduced rate   Abbr. Name
 Austria 20% 12% or 10% USt. Umsatzsteuer
 Belgium 21% 12%, 6% or 0% in some cases BTW
TVA
MWSt
Belasting over de toegevoegde waarde
Taxe sur la Valeur Ajoutée
Mehrwertsteuer
 Bulgaria 20% 0% or 7% ДДС Данък върху добавената стойност
 Cyprus 15% 5% ΦΠΑ Φόρος Προστιθέμενης Αξίας
 Czech Republic 20% 10% DPH Daň z přidané hodnoty
 Denmark 25% none moms Merværdiafgift
 Estonia 20% (as of July 1, 2009) 9% km käibemaks
 Finland 22% (23% from 1 July 2010 on) [12] 17% or 8% ALV
Moms
Arvonlisävero
Mervärdesskatt
 France 19.6% 5.5% or 2.1% TVA Taxe sur la valeur ajoutée
 Germany 19% 7% MwSt./USt. Mehrwertsteuer/Umsatzsteuer
 Greece 21% 10% or 5%
(reduced by 30% to 13%, 6% and 3% on islands)
ΦΠΑ Φόρος Προστιθέμενης Αξίας
 Hungary 25% (as of July 1, 2009[13]) 5% ÁFA általános forgalmi adó
 Ireland 21.5% (2009), 21% (from January 1, 2010) 13.5%, 4.8% or 0% CBL
VAT
Cáin Bhreisluacha (Irish)
Value Added Tax (English)
 Italy 20% 10% or 4% IVA Imposta sul Valore Aggiunto
 Latvia 21% 0% or 10% PVN Pievienotās vērtības nodoklis
 Lithuania 21% (as of September 1, 2009) 9% or 5% PVM Pridėtinės vertės mokestis
 Luxembourg 15% 12%, 9%, 6%, or 3% TVA Taxe sur la Valeur Ajoutée
 Malta 18% 5% VAT Taxxa tal-Valur Miżjud
 Netherlands 19% 6% or 0% BTW Belasting over de toegevoegde waarde
 Poland 22% 7%, 3% or 0% PTU/VAT Podatek od towarów i usług
 Portugal 20% (as of July 1, 2008) 12% or 5% IVA Imposto sobre o Valor Acrescentado
Madeira and Azores 15% 8% or 4% IVA Imposto sobre o Valor Acrescentado
 Romania 19% 9% TVA Taxa pe valoarea adăugată
 Slovakia 19% 10% DPH Daň z pridanej hodnoty
 Slovenia 20% 8.5% DDV Davek na dodano vrednost
 Spain 16% (18% from 1 July 2010 on) [14] 7% or 4% (8% or 4% from 1 July 2010 on) [15] IVA Impuesto sobre el Valor Añadido
Canary Islands 5% 0% or 2% IGIC Impuesto General Indirecto Canario
 Sweden 25% 12% or 6% Moms Mervärdesskatt
 United Kingdom 17.5% 5% or 0% VAT Value Added Tax

Non-EU countries

Country   Standard rate   Reduced rate   Local name
 Albania 20% 0% TVSH = Tatimi mbi Vlerën e Shtuar
 Azerbaijan 18% 10.5% or 0% ƏDV = Əlavə dəyər vergisi
 Argentina 21% 10.5% or 0% IVA = Impuesto al Valor Agregado
 Armenia 20% 0% AAH = Avelatsvats arjheki hark
ԱԱՀ = Ավելացված արժեքի հարկ
 Australia 10% 0% GST = Goods and Services Tax
 Belarus 20%   ПДВ = Падатак на дададзеную вартасьць
 Barbados 15%   VAT = Value Added Tax
 Bosnia and Herzegovina 17% 0% PDV = Porez na dodanu vrijednost
 Brazil 12% + 25% + 5% 0% *IPI – 12% = Imposto sobre produtos industrializados (Tax over industrialized products) – Federal Tax
ICMS – 25% = Imposto sobre circulação e serviços (Tax over commercialization and services) – State Tax
ISS – 5% = Imposto sobre serviço de qualquer natureza (Tax over any service) – City tax*IPI = Imposto sobre produtos industrializados (Tax over industrialized products) can reach 60% over imported products.
 Bolivia 13%   IVA = Impuesto al Valor Agregado
 Canada 5% 4.5%2 GST = Goods and Services Tax, TPS = Taxe sur les produits et services; HST = Harmonized Sales Tax, TVH = Taxe de vente harmonisée
 Chile 19%   IVA = Impuesto al Valor Agregado
 Colombia 16%   IVA = Impuesto al Valor Agregado
 People’s Republic of China3 17% 6% or 3% 增值税 (pinyin:zēng zhí shuì)
 Croatia 23% 10% or 0% PDV = Porez na dodanu vrijednost
 Dominican Republic 16% 12% or 0% ITBIS = Impuesto sobre Transferencia de Bienes Industrializados y Servicios
 Ecuador 12%   IVA = Impuesto al Valor Agregado
 Egypt 10%   GST = Goods and Sales Tax (الضريبة على القيمة المضافة)
 El Salvador 13%   IVA = Impuesto al Valor Agregado
 Fiji 12.5% 0% VAT = Value Added Tax
 Georgia 18% 0% DGhG = Damatebuli Ghirebulebis gdasakhadi დღგ = დამატებული ღირებულების გადასახადი
 Guatemala 12%   IVA = Impuesto al Valor Agregado
 Guyana[16] 16% 0% VAT = Value Added Tax
 Iran 3%   VAT = Value Added Tax (مالیات بر ارزش افزوده)
 Iceland 25.5% 7%4 VSK = Virðisaukaskattur
 India5 12.5% 4%, 1%, or 0% VAT = Valued Added Tax
 Indonesia 10% 5% PPN = Pajak Pertambahan Nilai
 Israel6 16%7   Ma’am = מס ערך מוסף
 Japan 5%   Consumption tax = 消費税
 South Korea 10%   VAT = 부가세(附加稅, Bugase) = 부가가치세(附加價値稅, Bugagachise)
 Jersey8 3%   GST = Goods and Sales Tax
 Jordan 16%   GST = Goods and Sales Tax
 Kazakhstan 13%   Қосымша салық құны
 Kosovo 16%   TVSH = Tatimi mbi Vlerën e Shtuar
 Lebanon 10%   TVA = Taxe sur la valeur ajoutée
 Morocco 20%   GST = Goods and Sales Tax (الضريبة على القيمة المضافة)
 Moldova 20% 8%, 5% or 0% TVA = Taxa pe Valoarea Adăugată
 Macedonia 18% 5% ДДВ = Данок на Додадена Вредност, DDV = Danok na Dodadena Vrednost
 Malaysia9 10%   GST = Goods and Services Tax (Government Tax)
 Mexico 16% 0% IVA = Impuesto al Valor Agregado
 Montenegro 17%   PDV = Porez na dodatu vrijednost
 Mauritius 15%   VAT = Value Added Tax
 New Zealand 12.5%   GST = Goods and Services Tax
 Norway 25% 14% or 8% MVA = Merverdiavgift (bokmål)or meirverdiavgift (nynorsk) (informally moms)
 Pakistan 16% 1% or 0% GST = General Sales Tax
 Panama 5%   ITBMS = Impuesto de Transferencia de Bienes Muebles y Servicios
 Paraguay 10% 5% IVA= Impuesto al Valor Agregado
 Peru 19%   IGV = Impuesto General a la Ventas
 Philippines 12%10   RVAT = Reformed Value Added Tax, locally known as Karagdagang Buwis
 Russia 18% 10% or 0% НДС = Налог на добавленную стоимость, NDS = Nalog na dobavlennuyu stoimost’
 Serbia 18% 8% or 0% ПДВ = Порез на додату вредност, PDV = Porez na dodatu vrednost
 Singapore 7%   GST = Goods and Services Tax
 South Africa 14% 0% VAT = Valued Added Tax
 Sri Lanka 12%    
 Switzerland 7.6%
(8% from 2011 to 2017)
3.6% (hotel sector) and 2.4% (consumer goods)
Temporarily changing to 3.8% and 2.5% due to AI funding from 2011 to 2017.
MWST = Mehrwertsteuer, TVA = Taxe sur la valeur ajoutée, IVA = Imposta sul valore aggiunto, TPV = Taglia sin la Plivalur
 Thailand 7%   VAT = Value Added Tax, ภาษีมูลค่าเพิ่ม
 Trinidad and Tobago 15%    
 Turkey 18% 8% or 1% KDV = Katma değer vergisi
 Ukraine 20% 0% ПДВ = Податок на додану вартість, PDV = Podatok na dodanu vartist’.
 Uruguay 22% 10% IVA = Impuesto al Valor Agregado
 Uzbekistan 20 %   НДС = Налог на добавленную стоимость
 Vietnam 10% 5% or 0% GTGT = Giá Trị Gia Tăng
 Venezuela 12% 11% IVA = Impuesto al Valor Agregado

 

This is a list of tax rates around the world. It focuses on three types of taxes: corporate taxes, individual taxes and sales taxes (value added taxes (VAT) / goods and services taxes (GST) / sales). It is not intended to represent the true tax burden to either the corporation or the individual in the listed country.

Country/Region   Corporate   Individual   Payroll tax usually reduces taxable income   VAT / GST / Sales   Primary tax articles  
 Algeria 19 0-35%   7/14/17%  
 Andorra N/A 0% N/A 0%  
 Angola[citation needed] 35% 1-60%   5-50% (depending on the good)  
 Argentina 35% 9-35%   21%
 Australia[4] 30% 0-45%1.5% (Medicare levy) 4.75-6% (state) [5] 10% GST (0% on essential items) [6]
 Austria[citation needed] 25% 21-50%   20% (GST)  
 Azerbaijan[3] 22% 0-35%   18%  
 Bangladesh[3] 0-45% 0-25%   4-15%  
 Barbados[7] 25% 25%-35%   15% (hotel accommodation 7.5%)  
 Belarus[3] 24% 12% 35% 10/18%  
 Belgium[citation needed] 33.99% 25-50%   21% (6% for essential and selected goods)  
 Benin[citation needed] 35% 35%   18%  
 Bolivia 25% (IUE: on profits) – 3% (IT: income resulting from transactions) N/A 13% (RC-IVA: Complementary to the VAT regime – the employee can deduct it entirely using bills) 13% (VAT) – multiple rates (ICE: Consumption of specific products)  
 Bosnia and Herzegovina 10% FBiH, 10% RS [8] 5% FBiH, 0-15% RS [8] 33.76% FBiH, 42-57% RS [8] 17% FBiH, 17% RS [8]  
 Botswana 15% (plus 10% surcharge) 25%   10%  
 Brazil[citation needed] 34% 0-27.5% 31% 17-25%  
 Bulgaria 10% 10% 42.7% 20%  
 Burkina Faso 10-45% 2-30%   15/25%  
 Burundi[9] 35% 35% N/A    
 Cameroon[3] 38.5% 10-35%   19.25%  
 Canada[10] 19.5% 0-29% (federal)0-24% (provincial) 4.95% (CPP) 5% (GST)0-10% (provincial sales taxes or value added taxes)
 Chile[11] 17% 0-40%   19%  
 China[citation needed] 25% 5-45%   17%
 Colombia[3] 35% 0.29-38.5%   16%
 Croatia[3] 20% 15-45% 37.2% (nationwide)[12]
0-18% (local)
23% (0% on books and some food items)  
 Cuba[3] 30% 10-50%   12%  
 Cyprus[citation needed] 10% 0-30%   15% (0 or 5% for certain goods)  
 Czech Republic[citation needed] 21% 15% 47.5% 10% (certain goods), 20%  
 Denmark[13] 25% 0-59% 8% 25%
 Egypt[14] 20% 10-20% N/A 0-25% [15]  
 El Salvador 25% 0-25%   13%  
 Estonia[citation needed] 21% 21% 33% 20% 9% (certain goods and services)  
 Finland[citation needed] 26% 9-32% national, 16-21% municipal   22%
12% (food and fodder)
8% (e.g. accommodation and culture)
 
 France[citation needed] 33.33% 21% (social charges)0-50% (income tax) 45% 19.6%/5.5% on certain goods (e.g. food)
 Gabon 35% 5-55% 2.6% 18%  
 Germany 29.8% (average) 0-45%   19%/7% on certain goods (e.g. food)
 Georgia[3] 15% 20%   18%  
 Gibraltar 33% 17-40% N/A    
 Greece 22/25% 0-40%   19%-9% certain goods  
 Guatemala[3] 31% 15-31%   12%  
 Guyana[16] 35%/45% 33⅓%   16%/0%  
 Hong Kong[17] 16.5% 0-15% N/A N/A
 Hungary 16% 18% and 36% 50.5% 25%  
 Iceland[3] 18/26% 0-36.72%[18] 6% 0/14/24.5%  
 India[citation needed] 30-40% (+3% cess) 0-30% (+3% cess)   12.5%
 Indonesia 28% in FY 2009
25% starting FY 2010
5-30% starting FY 2009   10%
 Iran 25% 0-35%   N/A
 Ireland 12.5% 0-41% 16.75% 21% Goods (effective Jan 1st, 2010)
13.5% Services
0% Food
 Israel 27% 10-47%   16%  
 Italy 31.4% 23-43%   20%-10%-4% on some goods (foods, books)  
 Jamaica 33.3% 3-5% 25% 17.5%  
 Japan[citation needed] 30% 5-40%   5% (consumption)  
 Jordan[3] 15/25/35% 5-30%   16% (GST)  
 Kazakhstan[3] 20%(2009), 17.5%(10), 15%(11-) 10% 11% 12%  
 South Korea[3] 13/25% 9%-21.375% + 36% excess   10%  
 Latvia[19] 15% 26% 33.09% (9% by the employee) 21%  
 Lebanon[3] 15/4-21% 2-20%   10%  
 Lithuania 15% 0-15% 39.98% 21%  
 Luxembourg 29.63% 6-38.95%   15%  
 Malaysia[citation needed] 26% 0-26%   5% GST  
 Malta 35% 0-35%   18%  
 Mexico[citation needed] 28% 3-29%   16%  
 Monaco 33.33% 0%[20]   19.6%  
 Montenegro 9% 15%   17%  
 Morocco 30% 0-38%   20%  
 Nepal N/A 10-25%[21]   13%[22]  
 Netherlands 20/25.5% 0-52%   19% (6% for essential and selected goods)
 New Zealand 30% 12.5-38%[23]   12.5% (GST)
 Norway 28% 0-47.8% 14% 25%, 14% (food and drink in shops) and 8% (transportation).  
 Pakistan 35% 7.5-35%   16%  
 Panama[3] 30% 0-27%   0/5%  
 Peru[3] 27% 15-27%   2/19%
 Philippines 35% 5-32%   0 ; 7 ; 12%(in some cases, foreign investors are zero-rated)  
 Poland[citation needed] 19% 18-32% 41.11% 22%, 7% (reduced rate on certain goods)  
 Portugal[citation needed] 12.5-27.5% 10.5-40%   20%(reduced rates on certain goods—5% or 12%)  
 Romania 16% 16% 45.15% 19% (9% hotel accommodation …)
 Russia[citation needed] 13-20% 13% 10-26% before annual salary exceeds 450k RUB, 0% thereafter 0-18%(reduced rates for certain goods, no VAT for small businesses except for imports activities)
 Saudi Arabia[24] 20%-85%
11% Social security
Residents 2.5% Zakat
Non-residents 20%
N/A    
 Senegal[3] 33% up to 50%   20%  
 Serbia[25] 10% 12-20% 35.8%[26] 18%, 8% and 0%(reduced rates are for certain goods)  
 Singapore 18% (17% as of FY 2010)[27] 3.5%-20%   7% (GST)
 Slovakia 19% 19%   19%  
 Slovenia[citation needed] 22% 16-41%   8.5/20%  
 South Africa 28%[28] 18-40%   14%  
 Spain[citation needed] 25-30% 0-42%   16%, 7%, and 4%  
 Sweden 26.3%[29] 28.89%-59.09%[30][31] 31.42%[32] 25%. 12% and 6% for some goods.[33]
 Switzerland[3] 13-25% 0-13.2% (federal)   3.6/2.4/7.6%
 Syria[3] 10-45% 5-15%   Debuts in 2008  
 Taiwan[citation needed] 25% 6-40%   5%  
 Tanzania 30% 15-30%    
 Thailand[citation needed] 30% 5-37%   7%  
 Tunisia[3] 30% 0-35%   6/12/18%  
 Turkey[citation needed] 20% 15-35%   18%  
 Ukraine[3] 25% 15%   20%  
 United Arab Emirates[3] N/A 0% [34]   N/A  
 United Kingdom [35] 21-28% 0-40%
(50% from FY2010-11)[36]
23.8% (National Insurance) 0%/15%/17.5%
 United States[37][38][39][40][41] 15-39% (federal)
0-12% (state)
0-35% (federal)
0-10.3% (state)
15.3%, 2.9% regressive (federal) 0-10.25% (state and local)
 Uruguay[3] 30% 0-25%   23%  
 Uzbekistan[3] 12% 13-30%   10-20%  
 Venezuela[3] 15/22/34% 6-34%   8-10%/9%, will raise to 12% beginning April 1, 2009  
 Vietnam[citation needed] 28% 0-40%   10%  
 British Virgin Islands N/A 0% 10-14% N/A
 Zambia 35% 10-30%   17.5%  
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One Response to “Information on Value Added Tax”

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People need to understand that a VAT taxes a product for each stage of “increased value” of a product from the time the raw materials are extracted from the earth until it reaches the store shelf. That means the tax is hidden in the price because each middle-man pays for the tax by increaseing the price which he charges his customer. The end customer only sees it as increased cost, so he doesn’t realize how big the “tax” really is. He just blames the manufacturer!
Another hidden cost due to this tax is a result of the additional paperwork required at each stage for processing the tax. It requires a whole new level of accounting that adds labor cost at each stage of production. We get screwed twice by this tax!


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