Question

Which of the following statements about the Value-Added Tax (VAT) in NOT true?

1. The VAT is a tax on the changes in value that occur at each stage of production or distribution.
2. A VAT of 5% will yield more revenue than a 5% general sales tax because the VAT is collected several times.
3. The VAT is a regressive tax because it places a greater burden on persons with lower incomes.
4. VAT taxes are currently not in use in the U.S.
5. None of the above. All are true.

Answer 1

Option B is not true

Value Added Tax is levied on the actual transaction value of a product or service at each stage of production, distribution or sale to the end consumer. VAT is levied on different stages only on the value addition done at various stages.

It is not levied on the complete transaction value at each stage.

Hence, VAT will not yield more revenue than a general sales tax

All the remaining statements are true

Only Option B is false