Well, I disagree that there is any subjectivity or difficulty in determining “value-added”.
A business simply charges it’s customers a percentage of the price of the product it sells, and subtracts the VAT taxes it has paid in making the product (which are just a percentage of the cost of the goods it purchased to make the product). The difference is remitted to the government.
You may be right about that.
My experience with VAT, such as it is, was in Europe.
Anyway, I think we agree that the 999 plan does away with embedded taxes in the price of goods?
A value added tax or value-added tax (VAT) is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its manufacture or distribution. The manufacturer remits to the government the difference between these two amounts, and retains the rest for themselves to offset the taxes they had previously paid on the inputs.
The "value added" to a product by a business is the sale price charged to its customer, minus the cost of materials and other taxable inputs. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. With the VAT, collections, remittances to the government, and credits for taxes already paid occur each time a business in the supply chain purchases products.