No, there's no difference. Whether all prices rise by 25%, or all incomes fall by 20%, the system will reach exactly the same equilibrium. When a VAT is enacted, you can model this as everyone with an income paying the corresponding income tax. (For full accuracy, you'd also need everyone with monetary holdings to pay a one-time wealth tax, but you can safely ignore this because the amount of wealth is so small relative to the amount of income.)
The effect of the VAT is to make all money less valuable. This means that people will seek to earn less of it.
> For example, if a distiller buys a tank, income tax is immediately paid. But VAT only generates revenue many years later for the country
VAT is paid on all transactions; that's the whole point of VAT. You're thinking of a sales tax that exempts business purchases. As soon as the tank is purchased, its seller must pay the appropriate VAT.
Yes, VAT is levied on the sale of the tank by it's manufacturer. But the distiller can claim back that VAT. This continues up the value chain except for the consumer who is not allowed the claim back VAT.
> Using invoices, each seller pays VAT on their sales and passes the buyer an invoice that indicates the amount of tax paid excluding deductions (input tax). Buyers who themselves add value and resell the product pay VAT on their own sales (output tax). The difference between output tax and input tax is the amount paid to the government (or refunded, in the case of a negative amount).
Though of course a distiller isn't reselling its still; it is the final consumer of the tank.
> [example of] 10% VAT:
> At each stage of production, the seller collects a tax and the buyer pays that tax. The buyer can then be reimbursed for paying the tax, but only by successfully selling the value-added product to the buyer at the next stage.
That reimbursement comes from the customer, not the taxing authority.
This link explains it better. And it proves my point: VAT on capital goods (in this case helmets) bought by VAT registered businesses are effectively refunded in full.
That link says... exactly the same thing as wikipedia, still directly contradicting you. There is a question mark here that I'll take up later.
But the example goes:
1. A vertically integrated helmet producer produces helmets out of nothing and sells a batch of them to a mine for a total price of €240. This producer has added "€200" of value, despite the sale price of €240, and owes VAT of €40 at a "20%" rate, which it pays out of the revenue from the sale of helmets.
2. The mine has purchased €240 euros of helmets and converts that purchase into €1200 of ore. This might look like adding €960 of value, but it isn't. It sells the ore for €1200, and since it has added "€800" of value, it owes VAT of €160, 20% of €800, which it pays out of the revenue from the sale of ore.
3. Because the ore sold for €1200, the government is owed "20%" of that, or €200, which it receives in one payment of €40 (when the helmets are sold) and another payment of €160 (when the ore is sold).
So far the terminology here is deeply stupid but logically coherent.
The question mark I mentioned before is what happens if the helmets fail to be consumed in the production of this batch of ore. Presumably they'll be reused to produce more ore. It would be odd if they still counted against the mine's "value added" for the second batch of ore.
I tend to suspect that the mine is considered to have added more value to the second batch of ore, but the page doesn't address the issue. This would mean that capital goods depreciate in full immediately.
Now, your original comment:
>> For example, if a distiller buys a tank, income tax is immediately paid. But VAT only generates revenue many years later for the country when the beverage leaves the store.
This is clearly false. Both of your links say it's false. The taxing authority receives revenue on exactly the same schedule that it would if the VAT were an income tax. Try running all the same transactions again with a VAT of zero and an income tax of 17%.
The effect of the VAT is to make all money less valuable. This means that people will seek to earn less of it.
> For example, if a distiller buys a tank, income tax is immediately paid. But VAT only generates revenue many years later for the country
VAT is paid on all transactions; that's the whole point of VAT. You're thinking of a sales tax that exempts business purchases. As soon as the tank is purchased, its seller must pay the appropriate VAT.