Most of them believe in above mentioned benefits of VAT. However, since most people see VAT as an addition to the ongoing tax system republicans are favoring flat tax which has a lot of similarities with VAT. Some call flat tax a twin of VAT. It means that not everyone is considering to have some basic changes to the tax system but to have totally new tax policy.
Another pro of VAT is its simplicity on collection procedure. Many believe it can help to increase revenue flow to the government. Aging boomers are one of the warning points of increase in governmental spending. Medicare and similar programs will be in need of more revenue dollars because of aging. Therefore, Syracuse University professor, Leonard Burman, believes that adopting or adding VAT our tax system will make more money which will be spent in such of social programs.
The idea behind of VAT is that every party pays so much tax how much of value they put on product. A lot of examples made to explain why VAT has sort of built-in enforcement. Because it causes a “paper trail” of payment, each party in the manufacturing must pay. It also helps government to reduce collection costs. The relatively simple tax combined with a broad tax rate can mean a large amount of revenue with little …show more content…
When consumer does not know if the price includes VAT or not, because sales receipt does not include that information. Transparency is the fundamental principle of VAT but sometimes countries violate this. Sales tax, however, can be seen in sales receipt and it allows consumer to know before and after tax price of products. Some believe that in democratic countries such an option is not acceptable. It gives politicians and governments to hide the tax revenue from taxpayers and make an atmosphere where people think that cost of government is much cheaper than it