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You do not pay the government VAT. You collect VAT on purchases on the governments behalf, that amount was never yours in the first place. That aside I make a
by VBprogrammer 5y ago
You do not pay the government VAT. You collect VAT on purchases on the governments behalf, that amount was never yours in the first place.
That aside I make a comfortable living as a software developer in London. My effective tax rate is around 35%. If I was earning > 10x what I currently earn I don't think I'd be complaining about an extra 18% in tax.
- zajio1am 5y ago> You do not pay the government VAT. You collect VAT on purchases on the governments behalf, that amount was never yours in the first place. While technically true from the legal and accounting point of view, but from economic point of view one could argue that there would be one market price level without VAT (p0), and current market price level with VAT (p1, p1+vat). Then real effect of VAT on consumers is (p1+vat-p0) and on providers is (p0-p1).