Location of the Burden
As was observed last week, evidence to suggest that VAT had not led to a reduction in tax evasion might exist. The case for the likelihood of high loss of VAT revenue perhaps resides in the location of the burden for the tax. Some might say it is the nature of the beast. VAT makes its way through the production and distribution process to the final consumer. Everyone in the production and distribution chain, except the consumer, is able to obtain a refund of the VAT paid. The buck therefore stops with the consumer. Consumers have an incentive to cheat since VAT adversely affects their bottom line. The income that is in the line of sight of the VAT is the disposable income or the income left in consumers’ hands after
