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" VAT: ARE WE READY FOR THE BIG BANG     VAT: ARE WE READY FOR THE BIG BANG?   By   Dr. I.A. Khan, Lahore   Few fiscal topics are more important than value-added tax (VAT) which has become the single most important source of tax revenue in some countries, and one of the most important source in many more. The VAT has spread around the world more quickly than any other new tax in modern history. According to Alan Tait, the value added tax "may be thought of as the Mata Hari of the tax world - many are tempted, many succumb, some tremble on the brink, while others leave only to return, eventually the attraction appears irresistible"   Now the questions arise, what exactly is a VAT; what are its mechanics; why its growth has been extensive across countries and intensive within countries; what are its merits and demerits and is our country ready at this point to time to implement this tax?   Value-added tax is a "broad-based tax levied at multiple stages of production and distribution with---crucially---taxes on inputs credited against taxes on output. That is while sellers are required to charge the tax on all their sales; they can also claim a credit for taxes that have been charged on their inputs. The advantage is that revenue is secured by being collected throughout the process of production but without distorting production decisions. (International Tax Dialogue, 2005)   Like the personal income tax, a VAT is not so much a single tax as a set of taxes that share certain characteristics. So, in some countries like Pakistan, the same tax is named as Goods and Services Sales Tax (GST). Richard Bird has put this point in zoological terms, VAT is neither a gorilla nor a chimpanzee but rather a genus like 'primates'.…