4 ms·

I’m not really understanding how this is different from the VAT taxation scheme.

• sobani 7y ago
  VAT means Value Added Tax. @Forbo's was talking about a transaction tax. The difference can be explained by this completely made up example: A steel mill buys iron ore for $1 a kilo and makes steel of that. A nail factory buys steel for $1.50 a kilo and makes nails of that. A distributor buys those nails wholesale for $2 a kilo. A hardware store buys those nails from the wholesaler for $2.50 a kilo. A contractor buys those nails from the hardware store for $3 a kilo. The subcontractor bills $3.50 a kilo for those nails. The general contractor bills you $4 a kilo for those nails. With VAT you/the general contractor/all businesses involved pay taxes on a total of $4. With a transaction tax, it would be paid on $17.50. But the above is a simplified example. In the real world there are probably a lot more businesses (each specializing in their own niche) and therefor transaction involved in getting that nail into your wall.