Value-added tax (VAT) refers to the tax on exchanges, levied on the added-value resulting from each exchange. VAT is an output tax which means the tax due on sale lease or exchange of the taxable goods, or properties or services. The following are the thesis statements:
1) VAT is a regressive tax.
As VAT bestows personal end-users of products and services with extra financial burden, it could be considered as a regressive tax. Regressive tax means a tax imposed in a manner that the tax decreases while the amount subject to taxation increases. With respect to resources, it imposes a greater burden on the poor rather than the rich.
2) VAT is not a cost-effective endeavor for the states and governments.
Revenues from VAT always lag behind the expectations since it is relatively difficult and costly when it comes to administering and collecting.
3) VAT requires absolute transparency on the part of the government.
Though VAT is the easiest way to generate revenue, VAT does not prove to be substantial in accomplishing the objectives of the states and governments. The purposes of collecting VAT are not always disclosed to the public.
4) VAT is the most exploited tax system since there is no lobby group is in existence for this particular issue.
5) VAT benefits the multinational companies at the expense of small and medium-scale companies.
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