Subject: Administrative Ease at the expense of extreme burdens for the poor Comment: Full address at the end Dear Chairman of the Tax Reform Panel, Dear Panel Members, you solicited comments on impacts of a tax reform, advantages and disadvantages. Meeting all states expenses by a value added tax is adminsitratively most easy. It is a quaterly filing of the revenues each business had. It imposes however extreme burdens on the poor: To meet all state expenses by a VAT food costs, clothing, even medicine prices have to rise. For the wealthy consumables are only a small fraction of expenses. For the poor these expenses might be already 50% of all expenses. They will be further put under pressure. A state that already has this system is Tahiti (the islands in the Pacific, at least as was reported some years ago). The prices there are worldwide known as ultra-high. Suggestion: Just calculate how high a VAT would have to be if a budget equilibrium (e.g. no deficit) has to result. Calculate the impact on the middle and low income groups. And a correction of the available information: The VAT is only added at the "very end". Businesses also have to pay VAT but they get it reimbursed. Only the end-member, the private persons, cannot get VAT reimbursed. Most sincerely Dr. Peter Paul Smolka Address: Dr. Peter Paul Smolka Isolde-Kurz-Str. 85 D-48161 Muenster Germany Tel+Fax: +49(0)2533/4401 E-Mail: PSmolka@T-Online.de The State "International" was not on your list. As you asked for advice, e.g. input to improve your report, I gave it. I took just the firsr on the list. A good goverment is characterized by working stepwise at "creating paradise on earth for the citizens" - why else are people loyal to a state (e.g. financially solid). This solution (state expenses paid by VAT) increase burdens for those that are already under pressure and removes burdens for the wealthy. |