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### 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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Jackie (moderator)8 years ago |
Hi John, thanks for providing the link!
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John Bennett   8 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/
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Ron Larson (author)1 decade 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.
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