The Corner

Is the VAT a Money Machine? (cont’d)

Veronique, I’ve just had a quick scan of that article (not enough to do it justice, I’m sure: I’ll read it properly later), but if indeed it can be shown that VAT is an efficient source of revenue without necessarily increasing the overall size of government, that’s a good result. Remember too the circumstances of the current debate. As much as I am in favor of reducing the size and cost of the state (and doing so sharpish), the current mess is not going to be sorted out without some increase in tax receipts – and, no, economic recovery will not by itself be enough quickly enough to do the trick. 

If we have to increase taxes, that is better achieved by a broad-based tax than heaping yet more levies on individual income. The question of corporate taxation is a different matter. It’s difficult to avoid the conclusion that rates are too high, and loopholes too generous – the perfect state of affairs for the rent-seekers of Congress. It is thus unlikely to, what was the word, “change”.


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