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Old 09-23-2012, 07:57 PM   #59
Pawnmower Pawnmower is offline
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Quote:
Originally Posted by Literature View Post
Yes, there would be multiple taxes, but that's the way I understand consumption tax works in the countries that have it. If a person buys 200 widgets, and gets taxed on them, there's a consumption tax. But if a business buys 200 widgets to use for their widgetteer, they don't get taxed on that?
Actually it is a good question....The way it is handled in most countries is similar to how they do it in Europe (VAT/HST type of system)

For example:

Litcorp buys 1000000$ worth of widgets from Pawn corp, and pays some sort of consumption tax......then Litcorp silk-screens them all, and sells them to Dane Corp for packaging/labeling/warehousing......and gets 1.5 million.

Danecorp would pay consumption tax on only 500k, and not the 1.5M.....

Of course there are other ways to handle this but I believe that is one of the more common ways...

Now, that being said you could have different rates for raw materials (less for example) to promote manufacturing....or whatnot.

Sorry for the ramble, its a fair question and there are many ways it could be handled but I believe all of them are superior the current system.
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