The history of VAT [VAT basics part 2]

Despite its tremendous success, VAT hasn’t been used in practice for that long.

In the early 20th century, two people proposed independently of each other the idea of consumption tax managed by companies and organisations.

An American tax expert and economic advisor named Thomas S. Adams proposed it as being a more refined version of the corporate income tax.

At the same time, Wilhelm von Siemens, a German business man, suggested that a consumption tax addressed to end-consumers could be a very easily administered form of a gross turnover tax and sales taxes, for the government.

Shortly after World War I, countries started to adopt the idea. Germany and France were first out, and ever since, it’s popularity among national as well as local governments has increased.

OECD has reported that among the world’s 199 countries an astonishing 166 have implemented the tax in one form or another. The notable exception in the West is the United States.

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