The first step was initiated already in 1967 by replacing all cumulative multi-stage taxes which Member States had applied until then by a multi-stage non-cumulative value added tax. Thus, a general tax on consumption was introduced in all Member States, which was based upon the principle that the tax applied to goods and services is exactly proportional to the price, whatever the number of transactions which take place in the production and distribution process before the stage at which the tax is finally charged.