Comments on: Value Added Tax (VAT) Explained

By: okechukwu Ohadomere

okechukwu Ohadomere — Tue, 28 Apr 2009 10:00:53 +0000

do foreign students
(non-uk citizens/residents) pay vat for cost of tuition/education. for example, i plan to do a simulator flight training course at gatwick airport. the total fees is 2200GBP + VAT. will i as a foreign student be required to pay VAT.

By: Mike - London

Mike - London — Thu, 14 Feb 2008 05:38:26 +0000

I am in the UK. I happened across this page via a Google search on a technical VAT point. For more info on VAT see these useful UK Government sponsored websites: Businesslink.gov.uk - VAT Guide VAT - Beginner`s Guide - HM Revenue & Customs

By: Kirk

Kirk — Fri, 01 Feb 2008 22:20:33 +0000

It is great that alternatives to the 2 million word IRS code are being discussed, but the Fair Tax isn’t the answer. It could create black markets in goods to avoid the tax and barter would get even bigger. However, it would capture some tax revenues from those who engage in illegal activities: drugs, prostitution, etc.

I have seen some recommendations of a mixture of Fair Tax and Flat Tax. The combination would simplify life for folks and cover the downfalls of the two propsitions individually.

By: Patrick

Patrick — Fri, 01 Feb 2008 03:41:55 +0000

I understand the way it is done over there (I lived in the UK for several years), and it didn’t bother me. That was just the way it was done. In fact, one thing I loved was paying the sticker price in a store instead of adding taxes at the cash register (VAT was almost always added to the sticker price). Much simpler and I wish the US did that.

I think we need tax reforms and simplification in the US, but I’m not sure this is the answer. I think too many businesses would find a way to circumvent paying these taxes and in the end it would end up as a big mess. of course, I don’t have an actual solution…

By: jim

jim — Thu, 31 Jan 2008 19:09:53 +0000

Derrick: I believe you are right, part of the reason I asked Plonkee to outline the VAT is because it’s somewhat similar and because she’s the only international blogger I know of that is living in a country that has something similar to Fair Tax.

You are also right about the IRS sticking around, in some form or another, and instituting a Fair Tax could increase its workforce as much as it could decrease considering how much of the tax review process is now automated.

By: Derrick

Derrick — Thu, 31 Jan 2008 17:08:06 +0000

I may by wrong about my understanding of Fair Tax versus VAT, but I think VAT is added at each stage and Fair Tax is purely consumption tax. In the above example the raw materials to make the table were charged 7 pounds, and Fair Tax would only be added to the sale of the table.

The idea behind Fair Tax is to tax only once, and keep the cost of business down which should stimulate the economy (free market thinking).

Another goal is to get rid of the IRS, but I don’t think that is possible. Oversight is still necessary because taxes must be levied from retail. (Someone has to be sure businesses are reporting sales and taxes fairly.) Also legal conflicts that occurred with the cakes under VAT would have to happen with Fair Tax, only it would be whether a company was a consumer of jam or whether it was an ingredient in their product.