Another issue that must be faced by any sales tax/VAT system is whether the tax is only imposed at the ultimate consumer level.
H.R.25 (i.e. Fair Tax) is a retail only tax. the NRST is not collected on business to business purchases.
Only the seller of retail products is required to collect and remit that tax, and then only from the final consumer, if retail products are purchased by a business for legitimate business use the NRST is not charged.
The Fair Tax is expressly designed to avoid the creation of a VAT by creating a single stage tax. That is why it makes explicit in the language of the bill, the rule of tax once but only once, and explicitly does not tax business to business purchases, and other purchases for the legitimate purposes of carrying on business.
`(a) IN GENERAL- Any court, the Secretary, and any sales tax administering authority shall consider the purposes of this subtitle (as set forth in subsection (b)) as the primary aid in statutory construction.
`(b) PURPOSES- The purposes of this subtitle are as follows:
`(1) To raise revenue needed by the Federal Government in a manner consistent with the other purposes of this subtitle.
`(2) To tax all consumption of goods and services in the United States once, without exception, but only once.
`(3) To prevent double, multiple, or cascading taxation.
`(4) To simplify the tax law and reduce the administration costs of, and the costs of compliance with, the tax law.
`(5) To provide for the administration of the tax law in a manner that respects privacy, due process, individual rights when interacting with the government, the presumption of innocence in criminal proceedings, and the presumption of lawful behavior in civil proceedings.
`(6) To increase the role of State governments in Federal tax administration because of State government expertise in sales tax administration.
`(7) To enhance generally cooperation and coordination among State tax administrators; and to enhance cooperation and coordination among Federal and State tax administrators, consistent with the principle of intergovernmental tax immunity.
`(c) SECONDARY AIDS TO STATUTORY CONSTRUCTION- As a secondary aid in statutory construction, any court, the Secretary, and any sales tax administering authority shall consider--
`(1) the common law canons of statutory construction;
`(2) the meaning and construction of concepts and terms used in the Internal Revenue Code of 1986 as in effect before the effective date of this subtitle; and
`(3) construe any ambiguities in this Act in favor of reserving powers to the States respectively, or to the people.