consumption tax on the way in the u.s.?

Thursday, May 28th, 2009

the obama administration is considering the possibility of implementing a value added tax. this could be a 10% national tax on products that would be added to the state and city taxes on goods and services. so if a state has an 8% tax, this would raise the price of a purchase to 18%. thereby putting the nail in the coffin for retailers during this trying recession. you can find out more information here. and here.

the international monetary fund says: “VAT can be a regressive tax, especially when implemented at a single rate, as the IMF usually advises. This can worsen already-high inequality in developing countries, cut the tax base and cause a decrease in overall tax revenues. In addition, the ‘complex’ record keeping of VAT has been the source of problems: small businesses can be pushed into the informal sector, while governments may not have the administrative capacity to implement the VAT and its refund system.”

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