Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Father Terrence who wrote (23726)	7/11/2000 2:05:38 PM
From: Neocon	Read Replies (1) \| Respond to of 769670

ENCYCLOPÆDIA BRITANNICA britannica.com value-added tax government levy on the amount that a business firm adds to the price of a commodity during production and distribution of a good. Three major types of value-added tax have been identified, depending on the deductions allowed, but only one--called the "consumption" type--is widely used today. Calculation of the value-added tax of the consumption type can be made in any of three different ways, but virtually every country imposing the tax uses the "invoice," or "credit," method of computation. Using this method, each seller (the party responsible for collecting the tax and paying it to the government) first calculates the sum of all the taxes that he has collected on goods sold; he then totals the sum of all the taxes that he has paid on goods purchased. His net tax liability is the difference between the tax collected and the tax paid. It is generally assumed that the burden of the value-added tax, like that of other sales taxes,* falls upon the final consumer.* Although the tax is collected at each stage of the production-distribution chain, the fact that sellers receive a credit for their tax payments causes the tax, in effect, to be passed on to the final consumer, who receives no credit. The tax can be regressive (i.e., the percentage of income paid in tax rises as income falls), but most countries have at least partly avoided this effect by applying a lower rate to necessities than to luxury items.

To: Father Terrence who wrote (23726)	7/11/2000 2:08:53 PM
From: Neocon	Read Replies (1) \| Respond to of 769670

britannica.com ENCYCLOPÆDIA BRITANNICA sales tax levy imposed upon the sale of goods and services. A sales tax levied on the manufacture, purchase, sale, or consumption of a specific type of commodity is known as an excise tax. American terminology in this matter tends to differ from that used in the United Kingdom and former British colonies, however. In the United States, excises apply to imports as well as to domestic production; in British terminology excises may be applied only to domestic output. Whereas excises may be based either on quantities of the taxed product (specific excises) or on value, general sales taxes are inherently value-based taxes. Sales taxes are commonly classified according to the levels of business activity at which they are imposed--at the manufacturing or import stage or at the wholesale or retail level. Very often tax rates applied to commodities vary according to whether the commodities are considered essential or nonessential. Many countries impose excise taxes on such products as gasoline, tobacco, and alcoholic beverages. Although taxes on luxury items are politically popular, luxury consumption is difficult to define for tax purposes, and such taxes raise complex administrative problems while generating little revenue. Multistage sales taxes, which are imposed at more than one level of production and distribution, without relief for taxes paid at previous stages, are sometimes called turnover taxes. For reasons of administration and simplicity such taxes are based on gross receipts; consequently, the taxable value at each stage includes amounts taxed at the previous stage (as well as the taxes already paid at previous stages). In order to avoid such pyramiding of taxes, an increasing number of governments employ a value-added tax. This is a modified sales tax based on the net value added at each stage rather than on gross receipts. Roughly speaking, an enterprise's net value added within a given period is equal to output minus input, calculated as its total sales minus expenditure on goods and services purchased from other enterprises. Tax liability is not, however, calculated by applying the tax rate to the value added figured in this way. Instead, receipts are used to show the amount of tax at each step; each seller adds the tax to the price and acknowledges this on his bill. Each enterprise's net tax liability is then calculated as the sum of all taxes it collects on goods it sells minus the sum of all the taxes it has paid on goods it has brought. This is sometimes known as the "invoice" or "credit" method of implementing a value-added tax.