For your system to work, everyone would have to report all their purchases.
Not at all. The only ones held liable for collection and remittence of the tax are sellers and they are required to save copies of reciepts issued for the goods they sell. It is up to the state tax authority to administer and enforce the povisions of the tax law and perform that level of audits and checks of operating businesses necessary to assure compliance.
Nowhere, is a final purchaser of goods to report anything at all.
For one selling retail, one of the requirements is to conform to the legal requirements thereof. If not then the risks are those you take on of your own will.
You know, I've brought a lot of arguments against the NRST in my time (back when I was "Uriel1975"). I am convinced that some of my arguments are still economically-valid (such as my argument for the "purchasing advantage" that Public Sector Demand would enjoy over Private Sector Demand under an NRST); I just now think that the benefits of the NRST vastly outweigh such abstruse and hard-to-calculate "disadvantages".
One of my more economically-intricate arguments was that the NRST would "disadvantage" the Tax Free Municipal market (I think you'll remember that one, "ancient geezer")... except that the recent "bubble" in Treasury Bond prices has left Triple-A-insured Tax Free Municipals yielding more than Treasuries!! (Meaning two things: 1. my earlier argument against the NRST no longer holds any water, and 2. smart American investors should sell their taxable Treasuries to the stupid Japanese and buy Triple-A-insured Tax Free Municipals instead).
I am glad to say, however, that I never once offered the ridiculous (no offense, "Palmer") argument that under an NRST, "everyone would have to report all their purchases".
That's like saying that "under a State Sales Tax, I would have to file a form with the Statehouse every time I buy a cheeseburger from McDonalds".
Meaning no offense to anyone, it's a dumb and silly argument.
The only ones held liable for collection and remittence of the tax are sellers and they are required to save copies of reciepts issued for the goods they sell. It is up to the state tax authority to administer and enforce the povisions of the tax law and perform that level of audits and checks of operating businesses necessary to assure compliance.
The way I see it, there would have to be 100% auditing over a given reporting interval. For example if the retailer had to remit sales taxes at the end of each day, the auditors would have to buy all the merchandise from that retailer or observe every transaction, add up the totals for the day and compare to the reported totals.
At the flea market this would be difficult but not impossible. Like I said before, I have paid cash for negotiated prices for new merchandise. Many retailers won't negotiate on new merchandise and I can now understand why. But many have a mixture of new and used merchandise and none have any kind of cash register or other device to keep track of sales.
One example vendor sells bird houses. I have bought several. He could be tracked by noting the number of houses he brings to the flea market, the number he leaves with, and the average purchase price. Presumably the tax authorities would not have to do this all of the hundreds of new merchandise vendors, just enough to ensure compliance like you suggest. But they would have to ignore the 1000's of used merchandise vendors who slip new merchandise into the used. This is quite common with clothing. I have bought brand new shirts culled from racks containing many used work shirts. The price was negotiated.
Also for this type of auditing to work the gross receipts would have to be reported over short intervals (days, weeks or a month) in which all the merchandise flow was monitored.