Explanation:

The correct answer is option 'D', Value Added Tax.

Value Added Tax (VAT) is a type of tax imposed on goods and services at each stage of production or distribution, starting from raw materials to the final product. It is a multi-stage tax that ultimately accrues to the government.

The government has decided to replace the existing Sales Tax with the Value Added Tax system. The reason behind this is that the VAT system is more efficient and transparent than the sales tax system. VAT is considered to be a more progressive tax system because it taxes the value added at each stage of production or distribution, rather than taxing the final sale price of the product or service.

Under the Sales Tax system, tax is levied only on the final sale of the product or service. However, under the VAT system, tax is levied on each stage of production or distribution, which makes it more comprehensive and efficient.

Benefits of implementing VAT:

1. Increased revenue: VAT is a more comprehensive and efficient tax system, which can help increase revenue for the government.

2. Fairness: VAT is considered to be a more progressive tax system because it taxes the value added at each stage of production or distribution, rather than taxing the final sale price of the product or service.

3. Transparency: VAT is a more transparent tax system, as it is easier to track and monitor the movement of goods and services at each stage of production or distribution.

4. Reduced tax evasion: VAT can help reduce tax evasion, as it is more difficult to evade tax at each stage of production or distribution.

Conclusion:

The government has decided to replace the existing Sales Tax with the Value Added Tax system, which is a more efficient, transparent, and comprehensive tax system. The VAT system can help increase revenue for the government, promote fairness, transparency, and reduce tax evasion.