Only in in your simplistic rendition divorced from reality, you assume no implementation nor overhead costs associated with the VAT which adds substantially to the burden over the costs of implemeting a single stage tax such as the NRST.You say it would add substantially, I don't agree. It would add some, but not substantially.If you are worried about it, pay the businesses 0.5% of what they remit for their compliance costs. That's what the FairTax would pay for collection and would more than cover any compliance costs.
What is the bill number for your proposed VAT system? How many sponsors and co-sponsors are on board? What is the likelyhood of it beign passed? How does it address the IRS and the 16th?
You say it would add substantially, I don't agree. It would add some, but not substantially.If you are worried about it, pay the businesses 0.5% of what they remit for their compliance costs
Experience in real VAT systems say otherwise:
You say it would add substantially, I don't agree. It would add some, but not substantially.If you are worried about it, pay the businesses 0.5% of what they remit for their compliance costs.
Some interesting comparisons of VAT compliance costs NewZealand, and United Kingdom comes from this analysis of the effects of exempting products from a VAT (as politicians inevitably turn to doing).
Overall cost compliance in UK is 3.7% of revenue collected on a 15% VAT and in NZ 7.3% on a 12.5% VAT, the main difference between the two is more small businesses(where fixed costs overwhealm economies of scale) are required to register for the VAT in NZ.
The table on page 5 display costs as a function of business sales (i.e. turnover) is especially graphic and underscores the problems that plague the VAT generally where small businesses opt out and turn to the cash underground economy to evade its highly regulated environment and startup costs.
The problem with small business participation in a VAT system are so great that places like Norway for example simply give up and start looking at black markets with its household production as a blessing keeping their economy turning over and turns to raising the theshold where registration for the VAT is required concentrating the VAT onto ever larger businesses more able to fold the regulatory costs into its operations through economies of scale and vertical mergers limited the number of transactions to which the VAT applies.
The cost of a VAT to government and the business is quite high in relation to the number of taxpayers in a VAT system as a consequence of government trying to realise the false promises of better enforcement characteristics.
"The VAT is not a cheap tax to administer. The revenue raised should be equivalent to an RST at an identical tax rate, but more taxpayers must be registered and more tax returns made. Much money is collected only to be returned. Much fraud is possible through suppression of sales figures, barter transactions, understated debtors, false invoices, misdescriptions, multiple claims, customs fraud, and fictitious businesses. The costs of VAT administration vary widely depending on the exemptions, thresholds, zero-rating, number of tax rates, frequency of audit, and role played by other collection agencies (e.g., customs). In the EC, the ratio of staff to taxpayers varies from 1.123 in Belgium to 1.726 in Italy. A 1993 U.S. study reckoned that with a registration threshold of US$25,000, an annual audit rate of 10.6 percent, and an average audit length of 12 hours (more or less the norms for the United Kingdom and New Zealand), 18,850 staff years would be needed for 12 million taxpayers (1.637). If the threshold is set at US$100,000, the ratio drops to 1.529.
The United States has debated the possibility of adopting a VAT on numerous occasions. It has been seen as a way to reduce the budget deficit, finance Social Security, replace the corporate and personal income tax, and finance a health scheme or defense. In the United States, a 5 percent VAT, if education, financial services, and all medical care are zerorated, would yield about US$98 billion in 1998 (about 6.3% of revenues) (Congressional Budget Office 1995: 393). This yield is much lower than is common in Europe, and it suggests that to make the administrative costs worthwhile (US$1 billion for government and US$6-10 billion compliance costs for business) the rate might have to move toward the typical worldwide rates of VAT (10 to 20%). "
In fact as far as government administrative costs are concerned, A VAT's adminstative costs to government as a percentage of revenue collected have been measured to be double that of retail sales taxes or even corporate income tax collection, and only 33% less than personal income tax administration. Page 8.
http://unpan1.un.org/intradoc/groups/public/documents/nispacee/unpan004338.pdf
The more I look, the more I find on the subject that indicates all is not at all well where the VAT and its costs are concerned especially as it regards small businesses and small business startups:
Google Search australia value added tax overhead costs OR compliance costs