The Impact of Value Added Tax (VAT)
Value added tax is defined as a type of consumption tax that is placed on a product whenever value is added at a stage of production and at the point of retail sale. VAT is also defines as The Value Added Tax, or VAT, in the European Union is a general, broadly based consumption tax assessed on the value added to goods and services.
When goods or services are purchased, VAT is included in the price of the good or service. When businesses levy VAT on goods and services, it creates an additional level of accountability and obligation to the tax authorities as that tax must be remitted to the appropriate authority and not retained or considered as additional revenue by the business. Those payments are made monthly, quarterly, or annually and are calculated in concert with the business’s accountant to ensure accuracy.
It came into force in 1973, introduced by Lord Barber, the chancellor under Sir Edward Heath, and started off as a simple 10 per cent tax on nearly all goods bought from a business. Since then it has swollen in size, complexity and popularity.
Paddy Behan, a partner at Vantis accountancy firm and considered to be of the country’s leading VAT specialists, said: “It is hugely efficient tax, it’s a great tax from a revenue raising exercise. It has swept the world. More than 130 countries have now adopted it from Belgium to Burkina Faso. One of the few holding out is America, but academics are talking about Obama introducing it over there.”
VAT was originally a French idea, started in the 1950s. Britain introduced it as part of its condition of joining the European Economic Community. All countries joining the EEC had to replace their indirect taxes with the VAT. It replaced the Purchase Tax, which was a fairly complex system that had many different rates.
In the early days it was a relatively low level of no more than 10 per cent, with the exception of petrol and – briefly – electrical appliances, which were deemed in the days before Britain struck North Sea oil to be luxuries. They were subject to a 25 per cent rate
The purpose of this coursework this coursework is to investigation the Impact of Value added Tax on the Bahamian economy. I will also investigate my topic questions:
· International Vat impact
· Local Vat impact
· Analysis of both local and international impact
· Analysis of Vat
I plan to gather information through the use of questionnaires, interviews, book, and pamphlets from the revenue office. My intention of this of this coursework is to gain a better understanding of the topic and the influence it has not just locally but globally as well.