alt Hacker NewsNow I am curious, Understand that I am from the states, and consequently have zero intuition as to what a VAT is. But... the hard drive importer is directly using the HDDs and as such is not adding any value to the item, why are they paying a value added tax?
If I had to guess it is probably on the value that could have been added to the item.
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Yea, the idea is that the VAT effectively taxes the added value in each step of the value chain because there's a limit to how much you can charge for an item or service. E. g. a 25 % VAT does not necessarily mean the goods become 25 % more expensive; most of those 25 % would have been profit for the reseller, intermediates and manufacturer if it were not for the VAT. Perhaps a little contra-intuitively, a high VAT keeps prices down and business efficient because every intemediate is indirectly taxed even though the VAT is only charged to the final consumer.
It’s just the name for sales tax. Why is there a tax on sales, isn’t a sale a discount? Then is the sales tax negative because it’s the tax on the difference between the full price and the discounted price? You’d probably end up with a refund for buying the thing, unless your state has no sales tax.