Tony Smith wrote:

>> That's the beauty of VAT: one system, (almost) everything 
>> works the same, almost no paper work. No artificial 
>> difference between reselling and producing, between product 
>> and service. 
> 
> On behalf of taxpayers everywhere, I object (strenuously even!) to the
> phrase "the beauty of VAT". 
> 
> Beauty should be paired with sunsets, paintings, Ducati motorcycles (but
> not the wiring), women and those old PCBs with the groovy curved traces,
> not the output of bean-counters, budget trolls and other treasury
> riff-raff.

Taxes have nothing to do with "bean-counters, budget trolls and other
treasury riff-raff." This may be your personal view of it, but that has
nothing to do with the tax itself.

Taxes are a fact of life in community. If you ever tried to gather a
community for more than getting drunk together, you know that there are
generally some "community costs" that need to be shared. Anything that
lasts longer than a hangover calls for /some/ rules about how to share them
-- and already you're creating a "tax" (even though it may not be called a
"tax", but it's nothing different in substance). It's only natural, and as
such can have some beauty. Problem is few have. (But that goes for beer
bellies, too...)

Anyway, a sales tax system calls for a distinction between services and
products. Hm... how much of the prototype I'm selling to the customer is
service, how much is product? It also says that I can buy the $2.25 worth
of components I put in the product without paying sales tax, but I can't by
the $25k machine that I need to do that without paying sales tax. This also
creates the necessity to keep track of stock separately: what was bought
using the exemption (and in theory must be resold and may not be used
internally) and what was bought normally -- a huge bureaucracy creator.
(You know that you're not allowed to use a resistor from production stock
for development, right?) If I want to get the sales tax exemption, I have
to send the seller a document, which increases again bureaucracy. These and
other issues don't exist in a VAT system.

I find that a tax that works easily, can be done at home without a
consultant, without even a specialized program, which is easy to understand
and as much as possible follows logic, I find that such a tax qualifies for
"beauty".

Gerhard

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