Wednesday, August 11, 2010

Value added Tax (VAT) coming to America!

Assorted international currency notes.Image via Wikipedia
This time last year, I wrote an article in which I suggested that a goods and services tax might be implemented in America along with a gasoline tax. (see: Your Welcome America)  It appears I may have been a year premature as the idea is now being kicked around Washington.
A Value added tax (VAT) as is witnessed in Europe at around 20% is a scary thought for average Americans who are used to getting many Government perks without having to pay for them.  The Europeans made the mistake of "exempting" many basics such as food and clothing, etc and that is why their VAT is so high.
A 20% VAT would not even be in the cards for the U.S. so you can breathe a short sigh of relief.  However, as I suggested last year, a 2% Goods and Services tax (GST) being placed on "all" goods and services sold in the country, coupled with a further 10% tax on gasoline, would suffice to pull the U.S. out of debt, and propel a green energy sector forward to new heights.
Let's face it folks. Americans have been getting cheap gas for way too long, while the rest of the world pays 2-3 times what the average American pays for their gasoline. A 10% hike won't kill the economy. On the contrary, it will assist the "sea change" in energy policy that is taking place, and must take place. It is a positive and it must be implemented immediately, before market forces force up the price and that 10% goes to private industry instead of the taxpayer.
A 2% GST would be a huge push to pay down national debt.  It would also lay the ground work for a reduction in capital gains, corporate and income tax. Consider this!  Tax payers would receive 2% of every single transaction, from food to clothing, to cars, boats, jewelry, construction materials, and every hour of labor costs. Canadians griped and growled at first too, however it is exactly that GST introduced in 1991 that has allowed Canada to dodge much of the current economic malaise in the world, and why it is the only G8 country that has been "in the black" for 9 of the past 10 years.This tax is way overdue and will help to reduce many other taxes over time that will allow America to once again take the lead in world business.
There will be vicious and virulent opposition to such a tax, just like there was in Canada at the beginning.  It will come from all sides, especially money interests. However, when all is said and done, this is a good idea and it is overdue. It is time for Americans to join the rest of the world. Stop complaining America and get on with it.  Your economy, your dollar, and your place in the world depend on it.
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