If I pay someone to clean my apartment, I have to pay "value-added-tax". Can someone kindly inform me, what value is added? If anything is a fund transfer, of which I've paid income taxes, and the person receiving it, will (normally) pay income taxes.

@jinxd

what value is added?

Value added = turnover minus intermediate expenditure

That wasn't the point.. many or most services doesn't add any "value" to society, thus shouldn't be taxed as such.

Are you saying goods should be taxed but not services? Why?

@andy

> Are you saying goods should be taxed but not services? Why?

Yes. "Things" create a value, it adds value and there is a cost attached to "things". If you need to service that item, there is no value added. Whatever income for the service done, is taxed anyhow by the worker.

We didn't use to have VAT on services, now we do. VAT is also very high.

@jinxd So if the cleaner's service was worthless, why would you hand over money?


Yes, it's debatable whether taxes are too high / low. But surely you're taxed for all the value that was incrementally created along the entire chain (cleaning products + cleaning , etc.) .

"Value" here doesn't necessarily mean an intrinsic quality of something. It's basically a financially measure of how much supposedly was gained by the creators of the products and services; it's this proxy measure on which you're taxed.


Now what happens with the all the collected taxes that's an important question. How should it be spent?
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@andy I said not it was worthless..it had value from the point that people enjoy living in a clean house, and the person doing the job can feed their kids. My time is also worth something. if i cleaned it myself, should i pay tax for that? No, nothing was gained. the cleaning peron would pay taxes anyways (in most cases ;)

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