Value Added Tax: Let It Be

The idea of levying a tax on value added emerged in the first half of the twentieth century, and has spread throughout the world. Introduced in France in 1954, a value added tax (VAT) had been adopted by 10 countries by the late 1960s, by 48 countries by the late 1980s, and is used by more than 140 countries today. It has been so successful because, in comparison with other revenue sources such as foreign trade taxes, income tax, or social security contributions, VAT offers advantages in terms of revenue, neutrality (equal treatment for all sectors), and ease of administration (simplicity of monitoring and enforcement).