OPENING IN ECONOMIC SCIENCE: AN ERROR IN THE DESIGN OF VAT
OPENING IN ECONOMIC SCIENCE: AN ERROR IN THE DESIGN OF VAT.
It turns out, that the amounts «including VAT», in retail prices is not a tax. Тhese amounts are appropriates by manufacturers. And this applies not only to Russia but to all countries using the VAT.
Assume a manufacturer starts production. Gives the company working capital. Of the revolving fund, paid rent and other services, made purchases from suppliers, lists «VAT outgoing». Determine the cost of implementation, including all costs, including costs for payment to the VAT ( «VAT paid»), other taxes. Total revenues and «VAT incoming» including.
«VAT paid» = «VAT incoming» - «VAT outgoing».
Thus, the cost of implementing the two VAT:
• «VAT paid», because of the inevitability of accumulating costs in the price of their products;
• «VAT incoming», by virtue of the Act, which obliges customers to further price «incoming VAT».
Let the cycle ends up. It can be assumed that the subsequent cycles of production and monetary value is absolutely identical. Invariably in their largest «VAT incoming», «VAT outgoing» and «VAT paid».
The relatively long time there, and in some countries realized that the idea of separate accounts of VAT. Underlying this idea is that the independence of the financial flow of VAT from the financial flow to ensure production.
Assume for illustration that «VAT outgoing» send is transferred to them in the form of golden sand equal in value to «VAT outgoing». Let for certainty this will 1 kilogram of gold.
«VAT incoming», derived from customers, also comes with the manufacturer in the form of golden sand. Let for certainty it would be 2 kilograms of gold.
Then the amount of rubles for transfer to the budget «VAT paid» will be equal to the cost difference between the weights of these portions of sand.
This is the amount will go down in price realization as a component of cost «VAT paid» and returned to the manufacturer as a financial unit called «VAT paid».
This financial unit, along with such financial aggregates as «wages», «lease», «profit tax», etc. will enforce more and more production cycles.
Note that at the end of the zero cycle, the manufacturer, receiving 2 kilograms of golden sand ( «VAT incoming ») in sales revenue, paid 1 kilogram golden sand ( «VAT outgoing») suppliers, and, moreover, to give to the Capital Fund amount «VAT paid» equal to the value of 1 kilogram of gold sand - a difference of weights «VAT incoming » and «VAT outgoing».
Total, in the zero cycle from the manufacturer zero balance on VAT. But at the end of the first and subsequent cycles, there was no need to fill in the amount of working capital «VAT paid», returned into circulation in the composition of the proceeds from the sale of zero-cycle from the manufacturer each time is 1 kilogram of gold.
Manufacturer legally assign the difference between incoming and outgoing VAT. An error in the design of tax is obvious.
Returning to reality, we can say that we have determined that double recovery by the cost of transfer to the budget «VAT paid». Once a price realization, the second time in the composition derived from buyers «VAT incoming».
Thus, the entire VAT in retail prices, which more than $ 150 billion (Russia, 2007), attributable to the manufacturers.
Vladislav Skopsov (Russia, Saint-Petersburg)
It turns out, that the amounts «including VAT», in retail prices is not a tax. Тhese amounts are appropriates by manufacturers. And this applies not only to Russia but to all countries using the VAT.
Assume a manufacturer starts production. Gives the company working capital. Of the revolving fund, paid rent and other services, made purchases from suppliers, lists «VAT outgoing». Determine the cost of implementation, including all costs, including costs for payment to the VAT ( «VAT paid»), other taxes. Total revenues and «VAT incoming» including.
«VAT paid» = «VAT incoming» - «VAT outgoing».
Thus, the cost of implementing the two VAT:
• «VAT paid», because of the inevitability of accumulating costs in the price of their products;
• «VAT incoming», by virtue of the Act, which obliges customers to further price «incoming VAT».
Let the cycle ends up. It can be assumed that the subsequent cycles of production and monetary value is absolutely identical. Invariably in their largest «VAT incoming», «VAT outgoing» and «VAT paid».
The relatively long time there, and in some countries realized that the idea of separate accounts of VAT. Underlying this idea is that the independence of the financial flow of VAT from the financial flow to ensure production.
Assume for illustration that «VAT outgoing» send is transferred to them in the form of golden sand equal in value to «VAT outgoing». Let for certainty this will 1 kilogram of gold.
«VAT incoming», derived from customers, also comes with the manufacturer in the form of golden sand. Let for certainty it would be 2 kilograms of gold.
Then the amount of rubles for transfer to the budget «VAT paid» will be equal to the cost difference between the weights of these portions of sand.
This is the amount will go down in price realization as a component of cost «VAT paid» and returned to the manufacturer as a financial unit called «VAT paid».
This financial unit, along with such financial aggregates as «wages», «lease», «profit tax», etc. will enforce more and more production cycles.
Note that at the end of the zero cycle, the manufacturer, receiving 2 kilograms of golden sand ( «VAT incoming ») in sales revenue, paid 1 kilogram golden sand ( «VAT outgoing») suppliers, and, moreover, to give to the Capital Fund amount «VAT paid» equal to the value of 1 kilogram of gold sand - a difference of weights «VAT incoming » and «VAT outgoing».
Total, in the zero cycle from the manufacturer zero balance on VAT. But at the end of the first and subsequent cycles, there was no need to fill in the amount of working capital «VAT paid», returned into circulation in the composition of the proceeds from the sale of zero-cycle from the manufacturer each time is 1 kilogram of gold.
Manufacturer legally assign the difference between incoming and outgoing VAT. An error in the design of tax is obvious.
Returning to reality, we can say that we have determined that double recovery by the cost of transfer to the budget «VAT paid». Once a price realization, the second time in the composition derived from buyers «VAT incoming».
Thus, the entire VAT in retail prices, which more than $ 150 billion (Russia, 2007), attributable to the manufacturers.
Vladislav Skopsov (Russia, Saint-Petersburg)