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Comment by wizzwizz4 | Hacker News Reader

The third sentence of the Wikipedia article begs to differ. https://en.wikipedia.org/w/index.php?title=Value-added_tax&o...

> A value-added tax (VAT or goods and services tax (GST), general consumption tax (GCT)) is a consumption tax that is levied on the value added at each stage of a product's production and distribution. […] VAT is an indirect tax, because the consumer who ultimately bears the burden of the tax is not the entity that pays it.

(Even then, Wikipedia is oversimplifying: "ultimately bears the burden" isn't how economies work.)

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What that means is that you don’t pay VAT directly to the government, the business collects it from you and is responsible for giving the money to the government. But yes, the burden is on the end consumer.

Au contraire, the burden is on the end consumer's employer, who pays the money to the consumer, who pays it to the business, who is responsible for giving the money to the government.

… And so on, and so forth. "The burden is on" is not how economies work. Personal property is owned, but money is merely controlled – and that control is subject to caveats, because money only has value as far as it can be exchanged for goods and services. Most forms of taxation (but especially VAT) are abstract accounting tricks to accomplish complex cybernetic effects, with no simple interpretation as a levy or tithe.

That’s the most convoluted way of explaining taxes I have ever seen. By that logic nobody pays any taxes. Of course neither economists nor the government feel that way about taxes (including VAT), which is the reason why foodstuffs have a lower VAT.

Most non-luxury foodstuffs have a lower (often zero) VAT for the same reason that certain organisations pay zero VAT, and income tax is progressive. It has a similar effect as a subsidy, although the psychological interpretation is different (and you can't discount human behaviour when modelling an economy).

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