Vat Rates, Country Wise VAT Rates, Vat Rates in Europe

By: EconomyWatch   Date: 30 June 2010

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EconomyWatch

The core Content Team our economy, industry, investing and personal finance reference articles.

EconomyWatch, Content Team

 

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CountryRateStandardReducedArgentina21%10.5% or 0%Australia10%-Bulgaria20%-Canada7% or 15%4.5%China, People's Republic of217%6% or 3%Croatia22%-Dominican Republic6%12% or 0%Ecuador11%-Iceland24.5%14%India12.5%4%, 1%, or 0%Israel16.5%-Malaysia5%-Mexico15%0%New Zealand12.5%-Norway25%11% or 7%Philippines10%-Romania19%9%Russia18%10% or 0%Serbia18%8% or 0%Singapore5%-South Africa14%7% or 4%Sri Lanka15%-Switzerland6.5%3.6% or 2.4%

Limitations to VAT

It is important to note that quantity demanded for a good being taxed does not decrease, is not valid in real world circumstances.

The fundamentals of supply and demand suggest that any tax raises the cost of transaction for someone be it the seller or purchaser. In raising their cost, either the demand curve shifts leftward, or the supply curves shifts rightward. The two are functionally equivalent. Consequently, the quantity of a good purchased, and/or the price for which it is sold decrease. The example fails to recognize this, as it is different for every good. In sum, in understanding the above examples, one must realize they assume the tax is non-distortionary.

VAT, (as well as any other tax) distort what would have happened without it. Because the price for someone rises, not all the goods that would have been traded were there no tax are traded. Correspondingly, some people are more worse off than the government is made better off by tax income. In other words, a deadweight loss is created. The income lost by those being taxed is greater than the government's income; the tax is inefficient.

US Oklahoma Tax Commission Federal Income Tax Franchise Tax Board

 


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