[posterchild]

Assuming the same rate (otherwise there is no basis for comparison), is not the VAT only on the ‘value added?’ i.e. if the baker buys flour for 2$ and sells the baked good for $3 is the tax not on just the $1 difference?

In the end, as long as the tax mechanism is consistent to all parties and is hard to evade (and hence give unfair advantage to criminals), I’m more concerned with how much government takes in and what it is spent on. Solve that problem and then the taxation mechanism can be dealt with as a mere accounting problem.

[ClearCase_guy]

There is some merit to what you say, but in a complex economic system, in which goods need to be processed or exchanged along an extensive supply chain, government may "find" many opportunities to enact a VAT. Wheat and bread is somewhat straightforward, but what about a car? How many parts are involved? How many transactions are needed to gather the materials and construct an automobile? The government sees gold in such economic activity and can gather a "small" VAT multiple times. The result is an expensive consumer good, and a government with enough revenue to "solve every problem in the whole world".

I prefer a simple, direct, obvious tax on retail sales goods. No mystery about who is paying what, and if you want government revenue to go up or down, you see exactly what needs to be done.