The Value Added Tax (VAT)...Is It Coming to America?

The "Value Added Tax."  

In its simplest form, a VAT is a tax on the creation of value. At each stage of producing a product, from raw materials to fabrication, to assembly, to packing and shipping, each company is responsible for paying a tax on the value it adds.

As the VAT is always included in the retail prices, and consumers never have to pay more at the cash register, the tax increase would be hidden. In fact, consumers would no longer see a sales tax at the cash register. While that stealth will make a VAT seem "painless" to many, it is also what makes it so dangerous.

Most European countries introduced the VAT at rates around 10% and quickly raised it to the upper teens. Today most European countries have rates around 20% (the only notable exception is Luxembourg at 15%).
 

Country	Year Introduced	Initial Rate	Current Rate
Denmark	1967	10%	25%
Germany	1968	10%	19%
Spain	1986	12%	18%
France	1954	18%	20%
Ireland	1972	16%	21%
Italy	1973	12%	20%
Luxemburg	1970	8%	15%
Netherlands	1969	12%	19%
Sweden	1969	11%	25%
UK	1973	10%	18%

VAT rates have commonly been increased with hardly a whisper from the media. And they don't always go up in incremental single percentage points. Many European countries have raised rates 3% or 4% in one single year. In the case of Estonia, in 1993, rates increased by +8%.