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But if VAT is already organized, then the value of changing would go down?

Wikipedia has an easy comparision:

Value added tax - Wikipedia, the free encyclopedia

A value added tax (VAT) is a form of consumption tax. It is a tax on the "value added" to a product or material, from an accounting view, at each stage of its manufacture or distribution. The "value added" to a product by a business is the sale price charged to its customer, minus the cost of materials and other taxable inputs. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. With the VAT, collections, remittances to the government, and credits for taxes already paid occur each time a business in the supply chain purchases products from another business. The reason businesses end up paying no tax is that at the time they sell the product, they receive a credit for all the tax they have paid to suppliers.

It appears that sales taxes are easier in that they apply to fewer transactions, while VAT is easier in that they always apply (and thus discourages fraud).

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by A swedish kind of death on Sat Dec 18th, 2010 at 02:34:26 PM EST
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