[thethirddegree]

If I remember my economics courses correctly, a tax on retail purchases will tend to depress retail sales, further depressing the economy and killing jobs.

[Alberta's Child]

The purpose of a VAT -- in addition to the obvious purpose of revenue collection -- is that it serves as a source of revenue that is very difficult for ANYONE (even criminals) to circumvent.

Competent accountants and lawyers can help their clients reduce their income tax burden. It isn't easy to do this with taxes that are embedded in the process of buying and selling (sales tax, motor fuel taxes, etc.).

[fhayek]

Canada has a VAT (They call it the GST) to fund their health care. It makes their goods and services significantly more costly than similar products here. As a result, store in Niagara Falls and Buffalo (other border cities, too, I'm sure, but I'm from Buffalo) are kept afloat from Canadians coming across to avoid the tax. They come over wearing old clothes, buy new ones in America, and leave, and change in the parking lots, often leaving the old clothes on the ground or in a garbage can. Then they brag about their 'free' health care.

The final costs can be significant. I talked to a manager of one store who claimed that a specific bra in her store costs $32, but in Canada, the same bra would cost $100. Now, I guess it was a special size, like an 'F' (I didn't even know that size 'F' existed), but still, you get the point.

[Sender]

I never took economics courses, but further taxing retail purchases will certainly lower sales and keep the economy down. It will also make American products less competitive, with every phase of production inflated in price from what it used to be. Will this same VAT system be imposed on products made in China?