Fiscal
Value-Added Tax (VAT)
Definition
A consumption tax levied at each stage of production on the value added to goods and services, ultimately borne by the end consumer.
Explanation
VAT is the most common form of consumption tax globally — over 160 countries use it. Rates range from 5% (Japan, Canada) to 27% (Hungary, the EU's highest). The US is the only major economy without a national VAT/GST. VAT is efficient (hard to evade compared to income tax) but regressive (takes a higher share of income from the poor). It typically generates 20-30% of government revenue.