Question

The primary goal of a Value Added Tax (VAT) is to:

• A. Tax consumption at each stage of production and distribution.
• B. Encourage hoarding of goods to drive up prices.
• C. Shift the tax burden entirely onto the producer.
• D. Provide subsidies to all businesses regardless of profitability.

Answer 1

Answer:

A. Tax consumption at each stage of production and distribution.

• VAT is a consumption tax placed on a product whenever value is added at a stage of production and distribution, from the raw material to the final retail purchase.