【正文】 an be deducted from the tax it charges to its customers． The government only receives the difference； in other words， it is paid tax on the gross margin of each transaction， by each participant in the sales chain． Sales tax is normally charged on end users(consumers)． The VAT mechanism means that the end— user tax is the same as it would be with a sales tax． The main difference is the extra accounting required by those in the middle of the supply chain； this disadvantage of VAT is balanced by application of the same tax to each member of the production chain regardless of its position in it and the position of its customers, reducing the effort required to check and certify their status． When the VAT system has few, if any, exemptions such as with GST in New Zealand， payment of VAT is even simpler. A general economic idea is that if sales taxes exceed 1 0％， people start engaging in widespread tax evading activity(1ike buying over the Inter， pretending to be a business， buying at wholesale， buying products through an employer etc. On the other hand． total VAT rates can rise above 1 0％ without widespread evasion because of the novel collection mechanism． However， because of its particular mechanism of collection， VAT bees quite easily the target of specific frauds like carousel fraud, which can be very expensive in terms of loss of tax ines for states. Principle of VAT The standard way to implement a VAT involves assuming a business owes some percentage on the price of the product minus all taxes previously paid on the good. If VAT rates were 10％， an orange juice maker would pay 10％ of the￡ 5 per litre price (￡ )minus taxes previously paid by the orange farmer(maybe￡ )． In this example， the orange juice maker would have a ￡ tax liability. Each business has a strong incentive for its suppliers to pay their taxes， allowing VAT rates to be higher with less tax evasion than a retail sales tax． Behind this simple principle are the variations in its implementations， as discussed in the next section． Basis for VATs By the me thod of collection. VAT can be accountsbased or invoicebased. Under the invoice method of collection, each seller charges VAT rate on his output and passes the buyer a special invoice that indicates the amount of tax charged. Buyers who are subject to VAT on their own sales(output tax)， consider the tax on the purchase invoices as input tax and can deduct the sum from their own VAT liability. The difference between output tax and input tax is paid to the government (or a refund is claimed， in the case of negative liability). Under the accounts based method， no such specific invoices are used． Instead， the tax is calculated on the value added, measured as a difference between revenues and allowable purchases. Most countries today use the invoice method, the only exception being Japan, which uses the accounts method.Chapter II Criticisms The “valueadded tax” has been criticized as the burden of it relies on personal endconsumers of products. Some critics consider it to be a regressive tax, meaning the poor pay more, as a percentage of their ine, than the rich. Defenders argue that excising taxation through ine is an arbitrary standard， and that the valueadded tax is in fact a proportional tax in that people with higher ine pay more at the same rate that they consume more. The effective progressiveness or regressiveness of a VAT system can also be affected when different classes of goods are taxed at different rates. To maintain the progressive nature of total taxes on individuals, countries implementing VAT have reduced ine tax on lower ineearners, as well as instituted direct transfer payments to lowerine groups, resulting in lower tax burdens on the poor. Revenues from a value added tax are frequently lower than expected because they are difficult and costly to administer and collect． In many countries, however, where collection of personal ine taxes and corporate p