a tax levied on each party that adds value to a product throughout its production and distribution.
The United States has not previously implemented a VAT tax, but the nation's considerable debt level is causing speculation that it may soon impose one.
Supporters of the VAT system contend that it distributes taxes on retail sales more evenly between producers and consumers.
Consumers pay no additional tax at the point of sale because the government has already collected taxes from each party in the value chain. Still, consumers end up paying the tax because producers and distributors must increase prices to compensate for their tax burdens.
So the poor are not overly burdened, many countries exclude the VAT on certain items such as children's clothing.