BM> The sooner we get a VAT the better.  Just about every significant
BM> modern economy has a VAT.  The Libs did this country great damage
BM> by their inept handling of the GST and thereby making such a tax
BM> unlikely for the next decade.  It will come, but what a lost
BM> opportunity.  Such a tax raises income efficiently from the "black"
BM> economy and is virtually unavoidable.  Even drug dealers have to eat
BM> and buy clothes.  And a VAT actually makes it easier for the pollies
BM> to sell an increase in the level of VAT than to sell a hike on petrol
BM> excise for example.

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

Sure, but its much harder to evade VAT than what we have now.
Like he said, even getting paid in cash doesnt necessarily help,
you get charged VAT on what you spend that cash on anyway.

And you can get a much more equitable system too. The current
system taxes some stuff like spirits extremely heavily, and
other stuff like wine very lightly, so you get the quite ludicrous
situation that winos pay far less tax than whisky drinkers.

LM> Add the massive increase in paperwork,

I'm not convinced thats the problem its made out to be when everyone
has to computerise their business paperwork anyway, if only coz the
tax dept demands proper records for most businesses. And the ones
which can get away with minimal paperwork are often the tax rorting
cash based operations anyway.

LM> the immediate hike in inflation,

Thats a complete myth and is just an artifact of a silly way of
calculating inflation. If the total tax revenue doesnt change,
say in a move from the current grossly warped wholesale sales tax
system, to a VAT, it doesnt have to hike inflation. And inflation
is the lowest its been in many decades anyway, if you are ever
going to have a VAT, that may well be the time to do it.

LM> and that fact that it impacts more on the poor than
LM> the rich in terms of percentage of disposable income,

Yes, thats the main criticism of it, its a regressive tax. But
the true poor are on welfare anyway and you can just increase
the welfare payment to allow for that effect.

And its not as simple as it looks either. In the runup to the last
federal election with the GST proposed, I did some calculations for
a pensioner I know who wanted to know if he would be better or worse
off. Turns out a fantastic percentage of his income goes on very
heavily taxes stuff, grog and smokes, and he would be better off
with the GST.

LM> and I'm far from convinced that a VAT/GST is a good idea.

Yes, but you have to explain why its almost universal in the first
world countrys now. Clearly it cant be such an open and shut case
that its bad. NZ doesnt even talk about it much now the introduction
was so undramatic.

LM> I just want the government to go through the tax act like a
LM> dose of salts and simplify the existing pattern. The legislation
LM> and rulings associated with the FBT and superannuation are a
LM> major disgrace. A newspaper reported that tax officers have
LM> from 1600 - 2000 discretionary powers.

Yeah, its a complete dogs breakfast. OTOH part of the reason it is
is coz the system was clearly being outrageously rorted with people
getting paid outside the tax system on those fringe benefits. And it
was largely the well paid that were getting most of those too, which
conflicts with your 'impact on the poor' stuff. They usually never
saw anything remotely resembling a fringe benefit.

Yes, trying to catch the rorts resulted in an abortion.

LM> The Fin. Review mentioned 6000 pages of legislation and rulings,
LM> and over 600 separate rulings put out in 94. No wonder 70% of tax
LM> payers feel the need to use a tax agent.

True, but the vast bulk of them dont even have stuff like that anyway
and would be better off just filling out the taxpack and forget it.
Particularly normal wage and salary PAYE people.

--- PQWK202