> 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

> 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).