LM> In countries that have VATs, VAT evasion takes over from income
LM> tax evasion as one of the major past times.

 RS> Sure, but its much harder to evade VAT than what we have now.
 RS> Like he said, even getting paid in cash doesnt necessarily help,
 RS> you get charged VAT on what you spend that cash on anyway.
 
You evade the VAT the same way as you do income tax - with two
sets of books. A contract gardener, painter, electrician etc.
simply fails to report, or under reports income, then fails
to remit the tax to the Govt. The GST actually adds to their income -
as well as their normal fee which they fail to report, they can
charge 15% GST on the top ... which they fail to report or remit.
 
The Govt. has already made serious inroads into the black economy
with tax file numbers, both in the initial jobs and in the interest
earned in financial institutions afterwards, and with the system
of prescribed payments for builders. 
 
The idea of introducing this bureaucratic monstrosity just to
catch a few drug dealers seems a ridiculous idea.
 
 RS> And you can get a much more equitable system too. The current
 RS> system taxes some stuff like spirits extremely heavily, and
 RS> other stuff like wine very lightly, so you get the quite ludicrous
 RS> situation that winos pay far less tax than whisky drinkers.

The anomalies are a function of implementation, not the system itself.
However, this is a further nail in the "black economy" coffin. Many
luxury items will actually reduce in price; spirits, as you've just
pointed out, luxury cars, boats, perfume, entertainment electronics.
 
What's left is a tax on labour, aka jobs. Just what we need in times
of high unemployment.
 
 RS> Thats a complete myth and is just an artifact of a silly way of
 RS> calculating inflation. If the total tax revenue doesnt change,
 RS> say in a move from the current grossly warped wholesale sales tax
 RS> system, to a VAT, it doesnt have to hike inflation. And inflation
 
The GST projections were for a 4.4% increase. The real figure would
probably be higher, seeing as these figures were provided by the
coalition. The immediate effect is to wipe that amount off the top
of all savings and superannuation funds. That effect is very real,
and not recoverable. The income tax benefits apply more to those
on higher incomes (>$80,000) while the low and middle income get
screwed.
 
 RS> off. Turns out a fantastic percentage of his income goes on very
 RS> heavily taxes stuff, grog and smokes, and he would be better off
 RS> with the GST.
 
[Pensioner's income...] Hopefully atypical. There are many
young families who are stretched to the limit and not spending
on booze and smokes.
 

 RS> Yes, but you have to explain why its almost universal in the first
 RS> world countrys now. Clearly it cant be such an open and shut case
 RS> that its bad. NZ doesnt even talk about it much now the introduction
 RS> was so undramatic.
 
It's compulsory for all OECD countries. In NZ in 1988 there were
300,000 registered collectors. I could say more but I'm running out of time.
 
LM

--- Maximus/2 2.02