We have a clever system here (not often I'll say that about this country). Basically most items cost a fifth more than they actually cost.
A big manufacturer sells to fifty local retailers at 120% the true cost. The retailers sell them on to one million consumers at the same cost. The manufacturer pays their extra 20% to the government as tax. The fifty retailers hand over the extra 20% they took from consumers and claim back the extra 20% they were charged by the manufacturer. The government is 20% up, the consumers have contributed 20% and everyone else is even, no matter how many links in the chain there are.
To get a 20% contribution from a million consumers on every item bought over a year is a massive undertaking. The way we do it, the government gets one payment per manufacturer, one payment per retailer, and one claim back per retailer. That's 101 claims in the above case. And those 101 claims cover everything a million people bought at each of fifty stores for a whole year. Perhaps a billion items.
Who wants to count a billion things when you can count just over a hundred and get the same result?
A big manufacturer sells to fifty local retailers at 120% the true cost. The retailers sell them on to one million consumers at the same cost. The manufacturer pays their extra 20% to the government as tax. The fifty retailers hand over the extra 20% they took from consumers and claim back the extra 20% they were charged by the manufacturer. The government is 20% up, the consumers have contributed 20% and everyone else is even, no matter how many links in the chain there are.
To get a 20% contribution from a million consumers on every item bought over a year is a massive undertaking. The way we do it, the government gets one payment per manufacturer, one payment per retailer, and one claim back per retailer. That's 101 claims in the above case. And those 101 claims cover everything a million people bought at each of fifty stores for a whole year. Perhaps a billion items.
Who wants to count a billion things when you can count just over a hundred and get the same result?
Seriously, it's one of the most debated issues in our country. A system like that wouldn't work here =/