Re:London’s Great Exodus
by Daishiman on Monday October 14, 2013 @02:19AM
(#6545663)
VAT is not a 20% sales tax; it's a 20% tax over the profit the seller has over the final customer. If a seller has a 40% profit margin on a product then he pays taxes over that, not the entire cost of whatever he's selling.
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It's the customer who pays VAT. Businesses don't pay VAT, they only collect it for the tax man (and in cases where they have paid it, they claim it back).
VAT and sales tax have the same effect. https://en.wikipedia.org/wiki/VAT#Comparison_with_sales_tax