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2.3 Consumption Taxes

2.3 Consumption Taxes
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  • Math Help

    For the spreadsheet in Example 5(b), be sure you see that the 10% tax at each stage is only for the value-added and not for the new value at that stage.

    After all, that is the whole point of a "value-added" tax ― to tax only the value that is added at that stage of production.

  • Consumer Suggestion

    About 150 countries have a value-added tax (VAT), ranging from 5% in Japan to 25% in Sweden. Before traveling to a foreign country, you might want to find out what the VAT is before purchasing goods. You can find a list of VAT by country here.

  • Checkpoint Solution
    1. If the sales tax rate is 8%, then the sales tax is

    2. For a value-added tax of 8%, use a spreadsheet.

      Notice that in both cases, the total tax is $31.60.

  • Comments (3)

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    system user
    Jackie (moderator)3 years ago |
    Hi John, thanks for providing the link!
    0
    system user
    John Bennett   3 years ago |
    The link for the list of VAT by country doesn't work anymore. The list can now be found at http://businesstraveldestinations.com/vat-rates-and-refunds-by-country/
    0
    system user
    Ron Larson (author)7 years ago |
    I would guess that the main reason that the United States has not embraced a value-added tax is that it increases the number of tax forms that have to be processed.
    0
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