[ska]

It's not a sales tax, it's similar to a VAT but doesn't just compound.

So I suspect that if you are manufacturer, you pay it on your raw materials, you collect it on your finished goods, and there is a credit system in place so it effectively passes through.

[detourdog]

Thank you for the clarification. Is it used to keep manufacturers from wasting materials?

[ska]

Sorry for late reply. It's more complicated than that, most countries (there are lots with GST) who implement it have replaced something existing for manufacturers etc.

Usual justifications are 1) avoid cascading (you pay tax on the tax that was charged you for inputs) that makes things more expensive with more steps 2) simplify the whole system 3) make it easier for exporters to compete globally (e.g. because you can zero out the tax if govt chooses to allow)