few days ago I heard a dealer complaining about the amount of VAT payable. The complaint was based on if it had been more cautious and bought goods could have avoided all or part of the tax.
This complaint made me reflect and draw the following conclusion: the complaint is unfounded and VAT "finances" the accumulation of stocks. Why unfounded? Because to avoid paying VAT should never accumulate stocks trade continuously by the same amount for the tax and this clearly is not a long-term equilibrium. You can temporarily prevent your stock but when you reduce the tax paid at the time did not pay.
Reasoning in the same way also concluded that the tax used to finance the accumulation of stocks. Before a decision to combine goods, such purchases represent more tax credits for the trader, who uses them to make debits from sales and thus pay a lesser amount (or zero). The key is the system of credits and debits, which can avoid paying value-added generated today at the expense of a higher payment to be made in the future when more stock that is settled.
This complaint made me reflect and draw the following conclusion: the complaint is unfounded and VAT "finances" the accumulation of stocks. Why unfounded? Because to avoid paying VAT should never accumulate stocks trade continuously by the same amount for the tax and this clearly is not a long-term equilibrium. You can temporarily prevent your stock but when you reduce the tax paid at the time did not pay.
Reasoning in the same way also concluded that the tax used to finance the accumulation of stocks. Before a decision to combine goods, such purchases represent more tax credits for the trader, who uses them to make debits from sales and thus pay a lesser amount (or zero). The key is the system of credits and debits, which can avoid paying value-added generated today at the expense of a higher payment to be made in the future when more stock that is settled.
PD 1: It is assumed that there is no escape (partially) the tax, if any is complemented by the approach and therefore does not change.
PD 2: Maybe the complaint could have been referred to miss the opportunity to rebuild stocks using money earmarked to pay taxes.
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