What are the benefits or disadvantages of implementing a VAT, in place of PST/GST/HST?

Question

In case you don't know:

VAT - value added tax

PST - provincial sales tax

GST - goods and services tax

HST- Harmonised sales tax [both GST and PST combined, in certain regions of Canada]

Answer 1

The VAT is more or less the same as the GST and the HST (which is simply GST+PST rate).  For policy and other reasons there can be differences between the treatment of items under VAT/GST but the concept is that the tax should be borne only by the end consumer - you and me - and not anyone before the consumer.  So these taxes if paid by businesses are normally fully refundable.

The PST is a bit different and not as efficient as a VAT or GST.  In the main it is levied on the end consumer, but sometimes if you are a business that is the last user of the item or service - even if it goes into providing your goods or services - you'll get stuck with the tax.  At this point it becomes hidden as it must be built into the price charged by the business, hence the innefficiency as a good tax should be transparent - we should know what we are paying.

Answer 2

Well if the VAT is is levied on both Goods and Service .........well it is the GST.  So to answer your question there are no benefits/disadvantages of implementing a VAT in Place of the GST of HST since these two are in fact Value Added Taxes. Now for PST's most provinces have also allowed businesses to recover the taxes paid and hence these also work like VAT.s

Our GST is a VAT.   The GST/VAT tax was introduced to replace Sales Taxes.  

The major difference between the VAT taxes like the GST and our old Sales Taxes is the VAT's become neutral taxes in terms of the number of exchanges of  a good or service.  Only the final consumer pays the tax.  Business are allowed ITC's (Input Tax Credits), which offset the amount of GST paid against GST collected.

For a nice source/history see the following

http://en.wikipedia.org/wiki/Value_added...