Posted on 10/07/2005 8:39:52 AM PDT by SolidSupplySide
Jharkhand, the latest state to announce its decision to switch to the State VAT, must be commended. Despite being a BJP-ruled state at a time when the BJP leadership is preventing its states from joining the Vat regime, Jharkhand has chosen to do the sensible thing. It indicates either a change in the stance of BJP’s leaders, or some creditable independence on the part of Jharkhand’s leaders. This leaves six major states out of the system — Rajasthan, Chhattisgarh, Madhya Pradesh, Gujarat, Tamil Nadu and UP. Talks have been taking place with political leaders to get them to join in.
By staying out of the State Vat regime, the BJP has a political point to make. But what is UP’s excuse? The arguments against the State Vat are, in any case, getting weaker by the day. The performance of state revenues in the first five months of 2005 — April to August — has been encouraging. Revenues have grown at 16 per cent — higher than the 12 per cent historical average. Some states like Karnataka, Punjab and Delhi, have witnessed even stronger revenue growth at 25 per cent. The resistance that was to be expected from the trader community, which now cannot evade taxes as easily as it could under the earlier system [of sales taxes], has been a token one. This is also because of many sensible changes made to the VAT rules which ensured that small traders did not get unnecessarily burdened under the new administration. The self-assessment system in the State VAT also reduced the scope for harassment of traders by sales tax officials. An information network, allowing states to cross-check payment information has been put to trial and is expected to improve compliance and reduce evasion further. The Central Sales Tax (CST), which has to go by 2007, will now be reduced from 4 per cent to 2 per cent in the next fiscal year. Moreover, the Centre has assured any state worried about revenue loss of compensation. With Jharkhand and Uttaranchal joining in, the case in favour of the VAT has been further strengthened. It is important that all states join the system, otherwise the unscrupulous could exploit the differences in the tax regime between states. This would be unfair to all honest tax payers.
Also, we need to remember that the State VAT is an intermediate step towards the proposed Goods and Services Tax, which is a value added tax on all goods and services produced in the country. When 130 countries, including India’s neighbours like Pakistan, Bangladesh, Sri Lanka and China, have implemented the VAT, making their manufacturing more competitive, we need to join up or get left behind.
What lie? Once corporate and personal income taxes are out of the way, along with the ball and chain of compliance, prices could and should come down.
There IS no country that has implemented a tax system like the FairTax - none - and you know that. Challenging someone to demonstrate an example of something that doesn't exist is idiotic - and you must know that also.
For that very reason, your claims that "no country" has ever bveen able to sustain a sales tax such as the FairTax beyond nn% is an empty claim - and one that has NEVER been documented ... since there is no such country.
Why do you use such trash?
What lie? Once corporate and personal income taxes are out of the way, along with the ball and chain of compliance, prices could and should come down.That lie.
See #40 and try doing as lewislynn suggests and try reading the bill yourself sometime.
There IS no country that has implemented a tax system like the FairTax - none - and you know that. Challenging someone to demonstrate an example of something that doesn't exist is idiotic - and you must know that also.Huh? The claim that no country has been able to implement a national sales tax at the FairTax rate is an empty claim because no country has been able to implement a national sales tax at the FairTax rate?!?
For that very reason, your claims that "no country" has ever bveen able to sustain a sales tax such as the FairTax beyond nn% is an empty claim - and one that has NEVER been documented ... since there is no such country.
Try reading it again Looey - without your usual "cognition blinders" on.
Just what "... taxable property or services in connection with contributions, dues, or similar payments to the organization ..." do you believe the church provides? Show us the definitions in the bill, Looey.
All you have here is an out of context snippet that shows nothing at all. Do you think that redemption is perhaps a taxable service? Salvation??? A pot-luck dinner?? Running a soup kitchen???
IOW, Looey, what is the taxable property or service the church provides? Inquiring minds want to know.
Wrong, Nightie - I made no claim at all about the rate, but merely the tax system (regardless of the rate).
It is your argument that is nonsense ... or, more properly, Squirrel chatter.
You're both full of beans (along with the requisite hot air) in your "churches taxing everything" disinformation.
Here's the actual interpretation from the FairTax website since you haven't been able to post applicable portions from the bill (hint - they ain't there to back up your claim):
(SEC. 706. NOT-FOR-PROFIT ORGANIZATIONS) There is no definition of church in the FairTax legislation. Churches or houses of worship come under the definition of not- for-profit organizations. In order to receive advantageous tax treatment, a church must be a “qualified not- forprofit organization” – an organization that is organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educationa l purposes; as a civic league or social welfare organization; as a labor, agricultural, or horticultural organization; as a chamber of commerce, business league, or trade association; or as a fraternal beneficiary society, order, or association. And no part of the net earnings of said not- for-profit organization shall serve to the benefit of any private shareholder or individual. Religious organizations that meet the above criteria are issued a “qualification certificate” upon application to the state sales tax administering authority (on a form prescribed by the U.S. Secretary of the Treasury). The FairTax does not treat tithes, dues, contributions, and similar payments to religious organizations or qualified not- for-profit organizations as payments for taxable property or services subject to tax. Individuals make such payments or contributions to religious or other not- for-profit organizations tax free. If churches or non-profits provide taxable services at no charge (they run a soup kitchen for the poor, for example), these services are not subject to tax. Taxable property and services purchased by a qualified not-for-profit organization “for business purposes” are not taxable. The organization must present its qualification certificate to the seller when making a purchase in order for the sale to be tax exempt. If a religious organization or qualified not-for-profit provides taxable property or services in connection with contributions, dues or other payments to the organization, then it is required to treat the provision of the taxable property or services as a taxable purchase at the fair market value of the taxable property or services. In other words, purchases for business purposes are tax exempt and sales to consumers are taxable, e.g., a church selling Bibles. The church pays no tax when it purchases the Bibles but it must collect sales tax when it sells the Bibles. The church is likewise responsible for remitting the tax to the state sales tax authority. As the FairTax exempts savings and investment, there is no tax on interest earnings on endowments – assets, funds, or property donated to a not- for-profit organization as a source of income. Since the FairTax repeals all income/payroll taxes, there are no other federal reporting requirements for not-for-profit organizations. It also repeals the prohibitions on political activity by churches and not- for-profit organizations, as detailed on page 2 of this document.""FairTax treatment of churches and non-profit organizations
The "page 2" definitions referred to are the regs under which the tax exempt status may presently be jerked by the IRS - and make interesting reading but are not pertinent here since they don't apply under the FairTax.
Are you claiming that income taxes have no cost? If they are removed that businesses would never respond to competitive pressures by lowering prices?
India is the latest example of a country that is scrapping a sales tax in favor of a VAT. The problem that has been repeated around the globe from North America, South America, Africa, Europe and Asia is that when sales tax rates exceed 15% (non-tax inclusive), the sales tax suffers massive evasion.
Then Posted article discusses a VAT replacement for transaction taxes on commodity trades and other business to business turnover and excise taxes, NOT A RETAIL SALES TAX.
The resistance that was to be expected from the trader community, which now cannot evade taxes as easily as it could under the earlier system [of sales taxes], has been a token one.
Nice try at misinformation though.
From another article describing India's VAT as a more transparent replacement for business turnover and other excise taxes levied on business generally:
Note how it describes the existing sales tax structure the India's VAT replaces.
| Vat benefits http://www.indianexpress.com/full_story.php?content_id=79532
What is VAT Impact of VAT
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For the Indian VAT replaces the same style of business to business "turnover" taxes that were the base reason why the Europe went to the VAT:
In fact, the original reason for a VAT was due to the cascading effect of transaction/turnover taxes on all business operations (a VAT without purchase credits) that created devastatingly high tax burdens on business and economies.
The so-called "Fair Tax" has a non-tax-inclusive rate of 30%. This is double the rate that any country has found sustainable due to evasion. Because of sales tax evasion, those countries are converting their sales taxes to VATs.
The creation of the VAT had nothing to due with evasion rates of retail sales taxes.
http://www.uq.edu.au/economics/johnquiggin/news/GST9806.html
| "The VAT was introduced in France in 1954, to replace a system which relied a highly distortionary turnover tax on sales to supplement a rather ineffectual income tax system. The problem with a turnover tax is the 'cascade' effect arising from the fact that goods are taxed every time they change hands. The effective rate of tax on a good therefore depends on the length of the marketing chain from producer to final consumer. At even modest rates, cascade taxes are highly distorting. The VAT solves this problem elegantly, by allowing firms to credit the tax already paid on their inputs against the tax imposed on their sales. The net tax payable is therefore a fixed proportion of value-added. ..." "Like the metric system, the VAT was adopted by other European countries, and the use of a VAT was made a condition of membership of the European Union. Once again, the English-speaking countries had less need to make the change, and were slower to do so. Their income tax systems were more effective, and their wholesale and retail sales taxes were less distorting than cascade taxes. ..." |
The self-assessment system in the State VAT also reduced the scope for harassment of traders by sales tax officials.
I would like to know a little more about this "self-assessment" and the harassment of traders.
The CBO itself recently reported on these costs but that will make no nevermind to those who prefer to ride down that great river DE NILE!
How could that be, mathematically?
The Retailer sells his product for $100 and adds a 20% tax at the register and the government collects $20 on a $100 sale, just like a NRST. There is no difference to the customer. It's fully visible and there is no extra tax burden to any producer down the chain.(#9)
What about FICA? Does the VAT take care of that or is it collected separately and 15% more added to the VAT, making the comparable tax 35% instead of 20%?
Do you intend to reply to bigdog or do a mea culpa?
I would like to know a little more about this "self-assessment" and the harassment of traders.
Interesting, it seems the tax on trading causing all the difficulties between traders and the government, that is this core of the article, is evasion a 0.01% tax on broker's turnover, a transaction tax on commodity, stock and futures trading.
http://www.thehindubusinessline.com/businessline/2001/07/12/stories/141262yx.htmBrokers up in arms over turnover tax issueOur Bureau MUMBAI, July 11 THE issue of turnover tax on stock brokers continues to haunt the markets and this time, threatens the likely closure of markets. The stockbroking community is up in arms, thanks to dwindling trading volumes and falling brokerage rates over the last few months. Brokers, under the banner of BSE Brokers' Forum and the Association of NSE Members of India (ANMI), will take out a peace procession to protest against the imposition of turnover tax on stock brokers. Both the associations have been galvanising support from members over the last few days and expect over 500 brokers to assemble outside the office of the Securities and Exchange Board of India (SEBI) on Thursday at 4.00 p.m. The petition focuses on two pertinent issues. The issue of the SEBI turnover-based fees and registration of brokers for the derivatives segment on the two bourses. The Supreme Court had on February 1, 2001 upheld SEBI's legislative competence to levy a fee on the basis of brokers turnover. It had also said that SEBI would be collecting the fee in accordance with the Bhatt Committee report. However, brokers had argued that the R.S. Bhatt committee recommendations were made keeping in mind the 1994 capital market scenario. According to them, the recommendation could be interpreted in a variety of ways. And if it were to be applied `literally,' the liability of brokers, specially for those who have entered the capital market two years ago, would be very high. ``The bourses have now stipulated that those brokers, who have not cleared their dues to SEBI, will not be allowed to register for derivatives trading. The petition aims to resolve these issues and bring it to a close,'' a broker said. What perhaps is more significant is that the peace march is being held on the very day that SEBI is due to make a presentation to the JPC officials. The brokers' contention, according to sources in ANMI and the Brokers' Forum, is that all members should be allowed to trade in derivatives segment. Their argument is that since one derivative product, badla (carry forward) system, has been abolished, they should be allowed to trade in the new product (derivatives) which has been introduced in place of badla. Another point of contention among protesting brokers is that turnover tax has been fixed at one per cent of one per cent (0.01 per cent) of turnover as recommended by the R.S. Bhatt committee then. The Brokers' Forum chairman, Mr Mohan Vijan, said that the rate was prescribed when brokerage rates were one per cent. ``With current brokerage rates of 0.05 per cent with falling volumes, it is difficult for brokers to survive,'' Mr Vijan said. The brokers' associations are suggesting that SEBI tax may be based on gross brokerage earned than using the turnover as base for calculation. ``Keeping the spirit of Bhatt committee, tax at the rate of one per cent of gross brokerage may be levied,'' Mr Vijan said.
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Didn't Nightmare argue at one point that one of the reason he was against a retails sales tax was because he thought it was really a VAT tax...
Taxable property and services purchased by a qualified not-for-profit organization "for business purposes" are not taxable. The organization must present its qualification certificate to the seller when making a purchase in order for the sale to be tax exempt. If a religious organization or qualified not-for-profit provides taxable property or services in connection with contributions, dues or other payments to the organization, then it is required to treat the provision of the taxable property or services as a taxable purchase at the fair market value of the taxable property or services.
In other words, purchases for business purposes are tax exempt and sales to consumers are taxable, e.g., a church selling Bibles. The church pays no tax when it purchases the Bibles but it must collect sales tax when it sells the Bibles. The church is likewise responsible for remitting the tax to the state sales tax authority.
Didn't Nightmare argue at one point that one of the reason he was against a retails sales tax was because he thought it was really a VAT tax...No.
Are you claiming that income taxes have no cost? If they are removed that businesses would never respond to competitive pressures by lowering prices?Not unless you include the personal income tax - which means for that to happen everyone will have to take a wage cut. But that would be impossible.
The CBO itself recently reported on these costs but that will make no nevermind to those who prefer to ride down that great river DE NILE!And, of course, the will be no compliance costs or dead-weight loss under the FairTax. What a wonder!
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