The Tax on Value Added

The Tax on Value Added

The Tax on Value Added

The Tax on Value Added

Excerpt

Although the idea of value-added taxation originated over four decades ago, world-wide interest in its potentialities as a source of revenue began with the Shoup Mission's recommendation of 1949 for its use in the Japanese prefectures and with its official adoption by the French National Government in 1954. Moreover, it has been receiving increased attention since the recommendation by the Fiscal and Financial Committee of the European Economic Community in 1962 that it be employed as a means of harmonizing the sales tax systems of the member states.

In this book the character of value-added taxation is revealed primarily by exploring the manner in which such taxation is, on the one hand, related to those general levies customarily designated as sales taxes and, on the other hand, related to direct personal income and expenditure taxes. There is much need for this type of inquiry because the fact that a value-added measure may be used for any tax on income or product flows makes it necessary to distinguish among the various principles of taxation intended by any given proposal for a value-added tax.

Chapter 1 analyzes the value-added tax in terms of the various principles of taxation which it may be intended to implement. The remaining chapters of Part I describe in detail the two most significant examples of legislation applying the value-added tax, namely, the French and Japanese, analyzing them in terms of the principles which they are supposed to represent. The Michigan legislation is discussed in an appendix.

Part II probes more deeply into the nature of value-added taxation. It begins, in Chapter 4, with a consideration of the underlying philosophy.

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