When transaction taxes become too high, they're evaded as well.
For example, post-prohibition bootlegging in the US lasted as long as the booze tax was "high enough" relative to production cost.
We already have folks smuggling cigarettes in the US to evade taxes. And, in high tax states, some merchants don't collect sales tax.
No, a VAT doesn't stop this - smuggling and off the books manufacture isn't VAT-taxed. (Yes, you may get the VAT on the inputs, but not on any of the downstream value.)
When transaction taxes become too high, they're evaded as well.
For example, post-prohibition bootlegging in the US lasted as long as the booze tax was "high enough" relative to production cost.
We already have folks smuggling cigarettes in the US to evade taxes. And, in high tax states, some merchants don't collect sales tax.
No, a VAT doesn't stop this - smuggling and off the books manufacture isn't VAT-taxed. (Yes, you may get the VAT on the inputs, but not on any of the downstream value.)