Who would bear the burden of a VAT? Q.Who would bear the burden of a VAT? A.A value-added tax (VAT) is a tax on consumption. Poorer households spend a larger proportion of their income. A VAT is therefore regressive if it is measured relative to current income and if it is introduced without other policy adjustments. A VAT is less regressive if measured relative to lifetime income. Read more about Who would bear the burden of a VAT?
What is the difference between zero rating and exempting a good in the VAT? Q.What is the difference between zero rating and exempting a good in the VAT? A.For a “zero-rated good,” the government doesn’t tax its sale but allows credits for the value-added tax paid on inputs. If a good or business is “exempt,” the government doesn’t tax the sale of the good, but producers cannot claim a credit for the VAT they pay on inputs to produce it. Read more about What is the difference between zero rating and exempting a good in the VAT?
What would and would not be taxed under a national retail sales tax? Q.What would and would not be taxed under a national retail sales tax? A.In theory, all consumption would be taxed. In practice, there would be great pressure to narrow the base. Read more about What would and would not be taxed under a national retail sales tax?
