Value Added Tax, now there’s a misnomer if ever there was one. Is it a tax on value added goods, or in fact almost anything of value? Or is it the tax itself that is adding value? It’s confusing. Is it virtually fat-free milk or virtually fat-free milk?

We pay tax on our income, we pay a national insurance contribution, and depending on the country we reside in we pay a range of other taxes as well, like the Irish ‘universal social charge’, corporation tax, property tax, community tax and inheritance tax. Nothing wrong with tax of course, as long as national and local governments are providing good value in the form of social services for the income they make. There’s that word value again.

Scandinavian countries pay very high taxes, but people are very highly paid too and those countries lay on a superb array of social services.

Value Added Tax, or VAT for short, is a huge earner for governments, and an increasingly large number of different goods and services get drawn into the VAT net. How long before children’s items and basic items are forced to join the fold?

The level of VAT varies too. In Ireland it’s 23% for example. In the UK it’s 20% but a glance at the history books will tell you that it’s been creeping up from a low of 8%.

But really it’s the name that jars with me. Before VAT was called VAT in the UK it was called purchase tax, which is much closer to the mark.

I think I’ve always preferred the US term ‘sales tax’. Because that’s what it is. Simple, really. It’s no longer a tax on ‘value added’ good and services, it’s a tax on most things that are sold.

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