> >On behalf of taxpayers everywhere, I object (strenuously
> >even!) to the phrase "the beauty of VAT".
> 
> While I would agree with the objection to the adjective 
> "beauty" being used in this context, I would have to admit 
> that the VAT/GST system is a better method of taxation than 
> the old sales tax methods.
> 
> When GST was first introduced into NZ, I also thought it was 
> an unwise imposition, but as time went by I did grudgingly 
> agree that the way NZ did it, with an equal rate applied to 
> everything, was the best way, and am rather appalled at the 
> umpteen different rates used in the UK/Europe, with some 
> items being classified 0 rated, others through political 
> pressure having lower rates than the full rate, and then the 
> differing rates between countries in the common market area, 
> makes a mockery of what is otherwise
> (arguably) a fairer system.


Without triggering a tax debate...

For Australia, the 'one rate' was used as a selling point, to replace the
various sales taxes & tariffs.  It eventually ended up being 2 rates, 0% for
food, and 10% for everything else.  

Arguments raged over what exactly food was (!), eg a cooked chicken is a raw
chicken that has been, well, serviced, (cooked in this case), so the 10%
should apply.  

Much grumbing over books getting taxed.  More grumbing over the 20% software
tax being removed, replaced by the 10% GST, but prices staying the same...

The downside is under the 'flat rate' tax is everything gets treated
equally, and sometimes you don't really want to do that.  You may want to
penalise some items (eg luxury items or tobacco), and encourage others
(soldering irons).  This then creates more regulations to impose fees on
some items, or subsidies (eg farmers can claim a rebate on vehicles, so
everyone claims to be a farmer).

And you wind up where you started from.

Less paperwork though, if you happen to be in the right spot.

Tony

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