Message-ID: <199610050409.XAA04488@anditel.andinet.lat.net> Date: Fri, 4 Oct 1996 20:51:27 -0500 From: Reinaldo Vicini <mailto:interext@ANDITEL.ANDINET.LAT.NET> Subject: Re: Value-Added Tax To: Multiple recipients of list DEVEL-L <mailto:DEVEL-L@AMERICAN.EDU>
Dear friends:#From: David B. Hoffman <mailto:mdhoffm2@gsbpop.uchicago.edu> THe counter-arguement is that the poor spend a higher percentage of their income than do the rich, and therefore a tax on consumption might not be as progressive as one would think. Certainly you'd be hard-pressed to convince a low-income american who is exempt from income-tax that a 20-25% VAT (comparable to European VAT) would make them better off. #
As far as I have paid, VAT is not charged on the basic family basket. Since most of the income of poor people is destinated to fill basic needs, the amount paid in VAT would be considerably less. On the other han, to compensate that, there would be a luxury tax, say, 10% more for items considered as high-class...
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#From: Tu and Bob Myers <mailto:tuandbob@acy.digex.net> I believe this has two potential for harm. 1. There is a basic amount consumption necessary for survival. It could place an undue burden on low income groups. That's why some countries have a graduated income tax and so called luxury taxes. 2. In countries were there are many links in the distribution chain, the cost to the end user could be prohibitive.#
The first part could be solved, I think, by the selection of taxable items. On the other hand, the Value Added tax only increases in the value added between step of the distribution chain. In your value added tax statemet you subtract tax collected vs. tax paid and only pay the difference, which is a percentage of your step.
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---------- #From: Dr. CJ Meadows <mailto:meadows@iscs.nus.sg> Dear Reinaldo, I'm sure 20 other people will give you a similar response, but here goes, anyway.... As I understand it from my old economics classes, Value-Added Tax, like sales tax, in reality ends up being regressive in nature (higher % of income paid by the poor) and goes against the principle of the-rich-should-pay-more (in % terms as well as absolute). Luxury tax, aimed against certain rich-people-stuff escapes this problem but then can evolve into the government telling people what they shouldn't do (smoke, drink wine, take vacations, etc.) and can even extend into stuff like PC's and modems which get local people global information (the benefits of which have already been posted during the appropriate technology thread on this list). Dropping the Income tax would cut down on wasteful bureacracy (in the eyes of some, anyway), which would be great, but which could also be accomplished by a flat % income tax (changed for different income brackets, if desired), with no exemptions & "loopholes." But then, so much income can be hidden in cash and foreign bank accounts (no country names, please) that the whole system might might not achieve what it was designed for, anyway.#
Shouldn't everyone pay his/her fair share? If someone consumes more non-basic items, then can afford more. On the other half, there is a permanent "milking" insuring the Government a better cash flow How much money saves a good cashflow? In the case of US, I would say that at least one billion dollars. This VAT is tough at the beginning, but since you have ot pay it everytime you buy -goods and services-, you may not feel it as hard as the "income tax days". Less paperwork also of all kinds. How much is that worth? Billions and billions in a more productive economy?.
I would hope so
Reinaldo Vicini mailto:interext@anditel.andinet.lat.net http://www.colomsat.net.co/rotarios.bogota
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