The VAT Man Cometh: It Will Happen. How Bad Is It?
Surety
A VAT is coming. This prediction is wrapped in as much certainty as possible.
When?
Not before the 2010 elections. No Democrat standing for reelection whose seat is within 20 points will utter word one about a VAT. Their situation is already too desperate to suggest increased taxes.
It’s even money whether we’ll see active congressional committee work before Mr. Obama begins his reelection campaign: look for that in theaters near you, opening on January 2, 2011.
It’s a sure bet that the VAT comes by 2014, which is one year after Obama’s second term, or during the first year of whoever his opponent is. The more likely it looks like Obama keeps his seat, the sooner we’ll have the VAT.
Orwellian Spin
VAT, of course, stands for “value added tax.” It is as badly misnamed as the “earned income credit,” which really means unearned money gift.
A VAT doesn’t add anything: it removes value. There is no way a tax levied on a product or service can directly increase the value of that product or service.
Costs Rise, Profits Fall
Those who provide services will have to charge their clients a VAT. This acts exactly as a sales tax. Contractors must either lower their rates so that their clients pay the same as they do now, or they will lose business because their clients themselves will have less money to spend.
Most people and businesses will have less money for themselves. Remember: a tax removes money.
The Stages of VAT
The VAT is applied to “each stage” in an item’s or service’s development. But the definition of a process which creates something can be lengthened arbitrarily.
For example, widgets are made by (A) buying the raw materials, and (B) assembling them.
Rapacious politicians can easily regulate this process, defining each activity to legally be three, or seven, or eighty-two steps. You don’t just “buy” raw materials, you buy material X, then you buy material Y, and so forth.
After letting your imagination play with “assembly,” you’ll see how easily lawmakers can go berserk.
Swings Both Ways
VAT will woo both Democrats and Republicans, though it is the former that will respond with ardor. A substantial proportion of Republicans will vote for a VAT; all Democrats, except those owed a favor, will say aye.
A friend of mine (from Britain) recently went to Florida and told me he bought something for 39 dollars but when he went to the checkout it was about 45 dollars “I thought you said you did not do V.A.T or taxes on goods sold in America” he said. I explained that in America we pride ourselves in not having VAT or anything like Europe but that “like all governments and politicians” we cleverly call it sales tax instead. So its basically the same monkey, cept with different teeth.
Wow you are dumb! Sales taxes come from the states (and sometimes cities and counties). A VAT would be from the federal government on top of the sales tax.
I agree with old soldier, but for a different reason, you really are dumb.
Sales tax is applied at the point of purchase. VAT is applied at each step of the manufacturing process, which makes it a hidden tax, and much, much, more complex to adminster.
Duh, everybody knows that…
But what my friend was pointing out is that he had been told by alot of “Americans” is that they come over to Britain and brag about not having to pay “taxes” like they do in Britain when buying/selling things. Which, as you, batman, and your friend robin know, is not true. Now shoo….
I see you like to double down on stupid.
We don’t have a VAT, we have a sales tax.
They are not the same thing. Not even close.
Well, in addition to the history book I recommended, you can also buy a travel book. I recommend the rough guide. Then you can answer why Britain dont have state sales tax…hint: they dont have states… ha ha. Soooooo, maybe…in this case, they have to be similar, but hey, I don’t want to go too deep on this with you, your trying…
I will just call it even……life is too short. Good luck.
Now you are tripling down on stupid.
I said nothing about the source of the tax. It doesn’t matter whether the tax is adminstered at the state, city, or national level.
I said sales vs. VAT.
It’s a simple concept. I would assume that a simpleton such as yourself would be able to get it.
Six years ago I moved to the UK from the US to start a new business, so I know how VAT works here. Basically, business do not pay any VAT, at all. Only the end user pays VAT. Every business collects VAT from customers, and pays VAT to suppliers. Every quarter you file a report, and if you have collected more VAT than you have paid, you send a check to the queen. If you have paid more VAT than you collected that quarter (which would be unusual), the queen deposits money directly into your bank account within 2 or 3 days of filing the report.
Yes, VAT is applied at every stage of manufacturing from start to finish, but it isn’t what you think. When my suppliers invoice me they add the 17.5% for VAT to the invoice. When I invoice my customers I add 17.5% to the invoice too. Every 3 months I file a VAT report. I do this by clicking a button in my bookkeeping package. I can file the report online, or I can just have my booking keeping software connect to the “Her Majesties Revenue & Customs” website automatically. Because the online form consists of 6 boxes that you have to fill in, it only takes a couple minutes. Then I either pay the difference, or the difference is quickly refunded to me. If your company is making a profit, then you will collect more VAT than you pay, which is helpful with your cashflow.
@Paul of Alexandria: Every receipt I have ever seen in the EU tells you exactly how much VAT you have paid. They HAVE to give you a VAT receipt so businesses can reclaim the VAT. Restaurants too. Advertised prices generally include VAT, unless the company sells mostly to other businesses, in which case they list prices without VAT. My price lists do not include VAT on them.
Don’t sweat the moronic ad hominems. A VAT is a type of sales tax that is added at various defined points of purchase. You are basically correct in your explanation to your friend. I would have only added it is a State or city tax rather than Federal and applied at final point of purchase rather than in stages.
All too terrifyingly true — but you’ve omitted the politically most important characteristic of a VAT.
Because the VAT is applied to the operations of producers and middlemen, its effect on the price of an item is concealed from the ultimate purchaser. This makes it possible for politicians to redirect consumers’ anger over rising prices away from themselves and onto those who make and sell what they purchase. This is a marked contrast with the retail sales tax. It’s the aspect of VAT that makes it most beloved of politicians.
Just to Clarify Francis’s point for the economically lame bots who will start whining that the rich corporations don’t pay enough taxes…
Get this fundamentally important point through your excessively thick envy ridden heads… CORPORATIONS ARE NOT REALLY PEOPLE. THEY DON’T PAY TAXES.
Corporations pass the incremental costs of each tax levied against them on to… wait for it… 1. 2. 3..
THE CONSUMER/CUSTOMER (so your $1.29 loaf of bread now costs you $1.80 after all of the VAT taxes are added, taken way, applied credited…etc.)
VAT Tax codes are an insanity of special interest meddling, corporate bribery, government “incentives” and other corruption. Actually, I prefer to call it what it is; Institutionalized Corruption.
So for all of you TAX the RICH class envy Junior Marx and Engels Jockeys..
As Francis points out a VAT becomes a silent tax on all goods and services that immediately causes huge price inflation to the consumer. And that cost, unlike a retail sales tax. Is completely hidden, which is right where the corrupt want it to be.
Not good… not good at all…
The Mighty Fahvaag
There is one exception to the VAT-tax-pass-along, which we must not omit.
When VAT taxes raise the ultimate consumer’s price of a product above what consumers are willing or able to pay, the product becomes non-marketable and goes out of production. In the worst cases, the company that makes the product goes out of business. Of course, this is also true of any other cost imposed on a company by the government.
Since VAT taxes are assessed at each transfer of a product down the chain of production and distribution, this imposes a huge competitive disadvantage on products with a long chain — that is, with more than a few “links” at which company X sells partially completed products to company Y for additional processing or redistribution. This is likely to hobble small firms and “design-only” firms worst, as they have the greatest need for corporate “partners” in getting their products built, finished, and delivered to the consumer. So VAT both privileges large, vertically-integrated companies and confronts small firms and “start-ups” with a formidable obstacle.
Just another arrow in the social-fascist quiver, with which to guarantee that the large corporations will be faithful supporters of the regime.
The “Party of No” better fight against this monstrosity. They vote for this and I’m gone forever.
I’ve been thinking about this a lot recently, looking at Thailand, Belize, Australia. But they all have major drawbacks.
Really, where you are you going to go? The U.S. Virgin Islands look pretty good, but you get hammered by hurricanes all the time and there’s all the shortcomings of living on an island.
Bottom line is, we’re just screwed.
Right, Francis.
And it only just now occurred to me that this new tax can be introduced in song:
The Lullaby of Beltway
Come on along and listen to
The lullaby of Beltway,
The hip horray and ballyhoo,
The lullaby of Beltway.
The rumble of a Harry Reid,
The rattle of Pelosi,
The pols who make us bleed
The Obamas and Hillarys.
Goodnight baby,
Goodnight,
The VAT man’s on his way.
Sleep tight, baby,
Sleep tight,
There goes all our pay.
Listen to the lullaby of old Beltway!
I have not yet met an American businessmen – and yes I have met many – who can understand VAT, and the author of this article certainly does not.
First it is a tax on added value, not a tax which adds value, and is an end-user tax – normally members of the public – not a cascade tax.
Thus at any step in a supply chain, the VAT paid is reclaimed from the Revenue provided the company is VAT registered.
If Company A makes product X and buys two components from companies B and C, and component company B costs $10 plus 15% VAT – $11.50, and component from company C costs $15 plus 15% VAT = $17.25 then in total, company A pays $25 plus $3.75 VAT = $28.75. Companies B & C pass the VAT to the Revenue.
Company A can recover the $3.75 VAT, so its cost of goods is still $25. If company A having assembled product X sells to a consumer/end-user for $40 plus 15% = $46, then it owes the Revenue $6 but withholds the $3.75 it has paid B & C in VAT and pays net $2.25. The whole of the tax on the value added at each stage -$6 – is paid by the end-user.
Furthermore, anything company A buys – not just components for manufacture – whether desks, machines, laundry services which attract VAT, can be reclaimed, or withheld from VAT collected on sales.
Service providers then who do not buy widgets, find their tax on purchases reduced because they do not pay non-reclaimable sales tax on the things they buy, they recover the VAT instead by withholding it from the VAT they charge on sales. They do have to charge VAT on their services, but since their overall cost of business has decreased by the amount they formerly paid in sales taxes, they have no increase in costs so need not charge more to maintain profits and their customers instead of paying sales tax, pay VAT.
Thank you for proving how complex and subject to corruption the VAT is.
Have a sense of humor, John. The “VAT” is a name well within the boundaries of satire.
In your analysis—which I dispute—I notice that you do not refute the claim that the people get shafted at the end. Who pays the tax? You and I do.
You also didn’t try to refute the claim that the government can decide just when “value” is added; which, with a little creative thinking, can be anywhere. The tax is limitless.
Here’s what I dispute about your analysis: Companies A, B, and C pay the tax as you say, but they have to hire accountants, lawyers, and other salary earners to manage that tax. That adds costs to their bottom lines. It does it to A when he buys from B and C, and to you and me when we buy from A. And it does it to B and C, too, when they have to buy whatever they need to make their products.
And you didn’t answer my claim that because B and C have to charge higher rates for their same old wares, they will sell less and then have to raise prices to make up for the lag in sales. The same thing happens for A, of course, but the costs are passed to us. And will we buy as much when costs are suddenly everywhere increased by such a large percentage?
The effective rate of the VAT, then, is higher than the stated rate, just as I claimed.
Clearly what you do not understand is that the intent of VAT is Value Added to Government Services. I am being sarcastic . . . and assure you that the process you have so careful outlined . . . will NOT be what happens in the US. The US version will be a cascade tax, as that is what is currently being considered inside the Beltway. The politicos of the US are intent on destroying the economics of the country and the VAT will ice the cake.
The US Government is loudly saying . . . “Show Me The Money” . . . Get it?
It’s not Show me the money, it’s Give me the money.
“. . . instead of paying sales tax . . .”
I fully believe that VAT will be added ON TOP of sales tax. No one will eliminate sales tax and then implement VAT. The coordination of such a transition such that no revenue is lost would be too hard for politicians to wrap their heads around, so they will implement a relatively small VAT in addition to state and local sales taxes and then balloon it once it’s in place.
In the US, sales taxes are state and local, while this proposed VAT is federal. Unless the feds were to give the money generated by the VAT to the states, there is no way the states will be able to eliminate their sales taxes.
So,,, in essence you are saying VAT is a tax multiplier rather than a straight retail tax.
God help us~! This will be the end of the world as we know it.
Businesses won’t be the ones who end up actually paying the VAT. As with other costs related to marketing a product, the VAT cost will be passed on as well. The consumer will end up paying the VAT, and that’s every consumer, not just those with incomes over $250K a year.
So, Obama’s now willing to consider the VAT (as if he ever wasn’t). But he said over and over during his campaign that no one who made less than $250K a year would have to pay any new taxes. Let’s see, that makes this lie #___. Darn, he’s told so many lies I can’t keep track of the total number.
Unfortunately, there won’t be an “initial pay-down of our hideous deficit”. Congress will just spend the money on something else (“cookies for everyone!!!”, reparations, whatever). In the late ’90′s when it appeared the budget would be balanced, all of Congress scrambled around trying to find new things to spend money on. The VAT will result in higher taxes and higher deficits, until the system collapses and we get a dictatorship.
Based on history, anyone who believes Congress will use the additional revenues from a VAT to actually pay down the deficits and debt is a fool. Congress has less financial discipline than a spoiled 13 year old girl with unlimited use of her daddy’s platinum credit card. Any additional revenue will be spent on new vote buying schemes and then some.
Back in the Reagan years, tax rate reductions caused the economy to prosper so the collected revenues soared. Unfortunately, spending soared even faster, reportedly increasing by about $1.33 for every additional dollar of revenue.
Back in the 1990s following the end of the Cold War, everyone went about happily spending the “Peace Dividend.” Unfortunately, there were competing interests on who should get the money. They ended up with a compromise: 50% went to deficit reduction. 50% went to urban renewal. 50% went to new entitlement programs. 50% went to farm subsidizies. 50% went to…well, you get the idea.
This continued into the 2000s. When the economy improved and revenues increased, so did the spending but at a faster rate than revenue increases.
The hell of it is that Steele and the RINO gang will be more than willing to embrace this new gold mine, claiming it is good for the country because it will be the only way to pay down the national debt! Of course, that’s another lie… when they get their hands on this new revenue stream, they will waste it as fast as they do all others.
And the national debt keeps going up…
And the economy keeps getting worse…
And the Chinese keep getting stronger and more aggressive…
And Americans keep losing more and more liberty every day…
And the beat goes on!
Concealing the VAT in the purchase price is not an essential component of the tax. It is a separate policy, although an almost universal one in VAT countries. Canada being the one exception I know of. Here it has to be, at least, separated out on the receipt. This was a concession to opponents of the tax when it was originally proposed. That may be why our VAT started out at 7% and is now 5%.
Oddly, I have heard more than one person say they would prefer to have the tax concealed in the ticket price, so they wouldn’t have to think about it! People like that are the tax collectors dream.
John,
Thank you for your lucid explanation of the VAT. Unfortunately you left out the graft, greed and corruption. Any tax which is hidden from the taxpayer is an easy target for corruption. Does VAT apply to all products? food? who decides, and then who decides what categories certain good and services should be assigned? What constitutes “value add” and how does one measure intangibles? In the UK, for example, bras for girls carry no VAT but bras for women do, can you explain that to me? Now there is talk of rebates for the poor, less fortunate, because the VAT is a regressive tax, more opportunity for special interest and corruption.
Between you and me John, I would rather have a flat-rate consumption tax, one fully exposed to the taxpayer, where each percentage point can be attributed to some federal program so government is accountable to the people, (remember the “We the People” part?)
VAT is a tool for statists to control you. A flat-rate tax is an honest tax, no one gets a rebate or hand-out.
While I’m on the soapbox, the 16th and 17th amendments should be rescinded. The 16th to reduce the size of government and the 17th to return the balance of power to the States.
Exactly, either nobody gets a rebate, or everybody gets the same rebate. No complex qualification process. If there are to be any rebates at all, they should be claimable with a one page form asking for the name, age and social security number of all persons living in the household.
That’s one thing I like about the Fair Tax proposal. Their rebate goes to every man, woman and child living legally within the US. Period. No exceptions. No additions.
In Israel we have VAT, and it’s at about 15.5%. We’ve had it for a long time. I’m completely flustered by most of the objections I’m reading here, because they seem to me to have no connection to how it actually works. John’s comment is the only one which makes sense to me.
1) How is VAT hidden from the taxpayer? Everything I buy costs 15.5% more than it should. Half the time this even appears on the receipt. When I refuel it reminds me (as if I didn’t know) that 15.5% of what I paid is VAT. Same for shops and restaurants. It’s not hidden at all.
2) In the article he says “But the definition of a process which creates something can be lengthened arbitrarily”. Let us suppose this is true. What effect does it have? Adding stages to the V.A.T chain does not increase the amount of tax paid. If a 3-link chain of production which adds $10 to the cost of a product is arbitrarily transformed into a 10-link chain, the added value is still $10. The apparent gains due to the additional links cancel each other out because of refunds. In any case, you only have to pay VAT when you buy from another company. So the chain can’t be lengthened arbitrarily.
The main benefit of adding links is that at each stage in the process only a small amount of tax is paid, which lessens the interest of the two parties to make the transaction in cash off the books.
3) Some people say there will be exceptions (e.g. girls’ bras). This will cause corruption. Perhaps this is true, but it’s also true for sales tax, isn’t it?
4) William Briggs points out in a comment that this will increase account costs. This is, I think, the only valid point. But I don’t think it’s crippling. I think the overhead is small compared to the actual tax. If the tax is 15.5%, a ‘full percentage point overhead’ is peanuts.
I think VAT is bad because it’s a new tax, applied to cope with the irresponsible spending we’re seeing. It’s slightly worse than a sales tax because it’s more difficult to evade, and has a slightly higher overhead to administer. Of course it will increase over time, but that’s just like the income tax. But a tool for statists to control you? Come on.
If everything is taxed at 15.5% it’s a sales tax and not a VAT.
You left out the most important part. We will be having elections BEFORE this monstrosity is brought to the floor. If the 2010 are anywhere near as lop-sided as they look to be now, this VAT won’t even make it to the floor. Pelosi and Reid will be gone.
If you presume that V.A.T. is inevitable BEFORE it’s even been introduced legislatively, then IT WILL BECOME INEVITABLE.
There is nothing inevitable about it. The socialist takeover of America must be fought vigorously. This enemy must be defeated.
In Europe, the VAT does not reduce national debts, is siphoned off for other purposes. The same will happen here.
And, absolutley a tool for statists to control us. If you’re worried about where you next meal is coming from you’re controlled
Democrats take it as an article of the progressive faith that increased taxes will have no negative effect on the economy as a whole. The Obamoists have no clue about business, supply and demand, or human nature for that matter. They know that people (non-racist, patriotic people of course) will just smile and pay the added cost, secure in knowing that what the government is forcing down their throat is ‘for their own good’. Remember, Obama likes the VAT, and if you oppose his policies, you are a de facto racist. That about sums up the complexity of liberal ‘arguments’.
The threat of the Obamao regime putting a VAT tax into place is the reason why I just spent money that I didn’t want to at the moment to replace my 22 year old stove. The stove is still functional but it can not be repaired-the thermostat on the oven doesn’t work well and 1 of the burners doesn’t work. I would have liked to wait until next year to do so but I am not going to take a chance that there will be a VAT tax installed.
With a VAT tax I would not be able to afford to get the stove I wanted. Combine a VAT tax with the other tax hikes the Obamao regime has in store for us and I doubt I would be able to afford to replace it with any stove due to the huge increase of my federal tax burden. This will be the last major purchase I will make unless I absolutely have to and all my other purchases are being pared down to the bare minimum.
There’s an election coming up in November. Learn about your candidates and vote! This may be our last peaceful chance to halt the destruction of America.
The inevitability of a VAT is up for debate…
Do you really think any Republican would commit the political suicide of voting for this? The HCare bill couldn’t pull one Republican. Not one. The author thinks the largest across the boards tax increase in history, during what will still possibly be a recession mind you, would be even remotely politically feasible?
There is no there, there…
“Orwellian Spin” indeed. “Value added” means that tax is imposed on the extra value the market adds to a product at each stage of its evolution to a sold item. When a mine sells ore to a smelter, the transaction is taxed. When the refined metal is sold to a manufacturer, the difference between what the smelter paid and charges is taxed, and so on until the end customer pays the full amount of taxes paid along the way. The earlier adders-of-value receive credits for the tax they paid, and you, the final buyer, get to pay the whole sum of taxes imposed. Clear now?
I’ve always been clear about the VAT. It’s a revenue gusher and impoverishes everyone who pays it.
Of course, Chris Dodd needs another mansion, and Rangel needs more property in the Caribbean, and Nancy really DOES need her weekend trips to Frisco with the taxpayers paying the bar tab (for Maker’s Mark, Grey Goose vodka, and Dom Perignon — no Bud for Ms. Botox, thank you.) I sometimes wonder why Nancy can’t pay her own bar tab — she’s a multi-millionaire Stalinist, after all.
Just asking.
Seven months and she and her fellow clown Harry Reid are toast. Then HopeyChangey suddenly becomes a Hopeless President.
Anyone taking bets on a DEMOCRAT challenging HopeyDopey in 2012??
If the government insists on vastly expanding, how about if we vastly expand the underground economy?
If 12-20 million illegals can defy multiple laws in plain sight — even to the level of creating entire communities — then why couldn’t tens of millions of actual Americans do the same?
The reason is that decent moral law abiding citizens should not be forced into corruption because their government cannot be controlled. I for one do not want to become just as crooked as the Reids and Pelosis of the world. I want to stand before God as just.
Disobeying an immoral law does not make you unjust in the eyes of God.
Let’s make the United States government as fiskally irresponsible, as bloated, as indebted, as dysfunctional, as socialistic, as inept, and as huge as the European governments. Woohoo! We’re about to do it!!! I guess Greece, Portugal, and now Spain have taught the people in Washington nothing, absolutely nothing. Why in the world are we killing ourselves to be just like them? Once the VAT is here, the metamorphosis will be complete. We’ll be just as bad as they are, with the same unemployment, the same low economic growth, the same ill-equipped defense, and the same high taxes. What’s not to love? November, keep your eyes on November and make your vote count.
Bend over and grab your ankles, here it comes again, America! (Don’t forget to bring your own K-Y!)
We can only hope that if this is enacted the total VAT will be identified at the final purchase so that the people being robbed by DC will know the full effect. Bar coding and scanning would allow that total VAT to be printing as a separate line on a receipt. It is somewhat complex but most product tracking systems are capable of it.
The main difference between a VAT and a sales tax is that the VAT is applied throughout the manufacturing and distribution chain and is incorporated into the final register price without further notice. The state and local sales taxes in the U.S. (except for the gasoline taxes) are charged at the final point of sale and are an explicit item on the receipt.
The fundamental point to make is that very few people in a nation that charges VAT can tell you exactly how much that tax is, on the end purchase, since they never see an itemized receipt for it. They simply tend to accept it without further question.
There isn’t any real obstacle to displaying the full VAT on the final point of sale receipt.
Calling it a “stealth tax” or the “overlord of stealth taxes” is more like it. It’s purpose would not be to lower the deficit as would be promised. Its purpose would be to replenish the federal coffers for more federal spending. Cutting expenses or belt tightning is ok for you and me when we max the credit card, but not for the spend-aholics of Washington D.C..
This monsterous presumption of taxing for the public good only feeds the money/power junkies. This also helps us define “progressive” as progressive tax, and “liberal” as liberally taxing and spending. Bush was such a progressive and Obama has him beat four times over. Constitutional amendment on balanced budgets, please, or we could all be going Greek/Spain/Portugal.
I wish my feeble, public-school (until college)-fed-mind could enable me to calculate how many private sector jobs would be LOST by a 10% VAT. If our GDP is $13T (after the fake-fed-govt stimulus-pumping ends) and it’s 70% consumer-driven, then perhaps 10% VAT gets applied to $10T minus favored exclusions. So perhaps $1T extra fed revenue, which is GINORMOUS. But that money gets sucked out even if it inhibits spending and causes a depression, no? But anyway, how many private sector jobs might be destroyed. And who will ask these questions? Fiscal conservatives, yes. But the MSM won’t publicize the question, so we won’t get an answer!! It won’t be part of the debate!! And yet Obama lies that “jobs are his #1 priority” !! Another lie, especially since VAT will kill jobs, as taxes always do.
A 10% VAT just might be the straw that breaks the camel’s back.
But wait…….why would ANY Republican fiscal conservative Senators vote for it? Ergo, it can’t pass. Whoo. Close call.
Actually you don’t have to travel to Europe to experience the wonders of VAT….which is really a sales tax….In Canada it is called the GST…General Sales Tax.
It complicates the clerical work of ALL BUSINESSES….in fact it’s cost to collect and reclaim can exceed the tax itself.
Frequently it is a tax on other tax….for example gasoline and vehicles….
Then you have to joust with the GST people regarding what is end user and what is a value added cost. Defining what is “consumed in the manufacturing process” is wild. Frequently the revenuers try to define a end user itme as something which is not part of the finished product…..for example sand blast sand necessary to apply am industrial coating….abasives….the rod or wire involved in welding is but the gas or electricity involved is not.
http://economix.blogs.nytimes.com/2010/04/21/dont-fear-the-invisible-tax/?src=busln
Hidden taxes don’t matter.
Get educated on the subject of the VAT. There should be a substantive debate on the facts, not speculation.
Corruption, greed and how the money is spent is independent of how it is collected. The VAT in this case (complicated and ripe for fraud) is no different than the current tax structure, the fair tax or any other revenue collecting system.
Of course this will be in addition to any other taxes because unless entitlements are reduced, additional money will be required. Again, no different from jacking up the marginal tax rates.
The VAT has a much lower deadweight cost and is more efficeient, which is the political poison. Thinking is if you feel the tax more you are more likley to fuss/vote against. Not the case with changing payroll taxes or the VAT.