Comment by pokot0
12 days ago
Can someone explain to me why EU VAT is considered a tariff, while US sales taxes are not? They both seem a sale tax to me.
12 days ago
Can someone explain to me why EU VAT is considered a tariff, while US sales taxes are not? They both seem a sale tax to me.
Because VAT is collected at the border on imports, some people (wrongly) consider VATs a tariff. Considering that VAT is rebated on exports, VATs are trade neutral.
Sales tax as implemented in the US is not as tax efficient as VAT due to the impact of sales taxation on intermediate transactions during manufacturing. VAT only taxes the incrementally the value added at each transaction) whereas sales tax applies to the entire value at each stage.
Hmm how is it different in the US do you not get back in the sales tax that you paid for your input. Here the middle man pay tax on the buying price and then collects on the sell price. Then has to pay the government minus what they paid as input sale tax. So all increments on the price gets taxed till the end user. But the tax itself is not taxed again.
Im fairly certain VAT is collected at point of sale in the EU.
Does the US charge sales tax on B2B transactions? Really? Well no wonder you have problems with domestic manufacturing.
Many B2B transactions are tax-exempt but it's complicated. And gets really complicated once international transactions are considered. And also whether the company has a physical nexus in the place the product is being purchased. All in all, I think it would be simpler if the US adopted VAT. But that seems very unlikely.
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There's no federal sales tax so it varies by state.
Only people who are wrong consider VAT a tariff. Yes, importers have to pay it, but so do local manufacturers.
VAT has basically the same effect as sales taxes with a much more complicated tax incidence.
At an individual level, it’s not more complicated: it’s reimbursed instead of exempted. And if you’re charging it, it’s easier, since you simply always charge instead of maintaining your list of exceptions.
UK VAT certainly has a complicated list of exceptions, especially "non-luxury food" (see the Jaffa Cake case https://www.astonshaw.co.uk/jaffa-cake-tax/)
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Really wondering about the same, since VAT is applied to everything too, not only imported products and services.
The answer is: rhetoric. It's a fake argument to justify US tariffs. It won't work for people like you and me, but Trump fans will love it.
They're not. Only disingenuous charlatans say they are.