After reading the link provided by landover it appears one "advantage" of a VAT over a NRST is that, as it is commonly implemented, it is a stealth tariff on foreign imports. So, it will be favored by those who oppose free trade.Is there any advantage to VAT over an NST? Other than from the accountant's job security point of view?
VAT just seems so complicated to me, and seems to end the same. Am I missing something? Or is the VAT all about smoke-and-mirrors so the consumer feels that they are not being taxed, only greedy capitalist companies are being taxed?
- ERD50
While a VAT punishes imports, a NRST (if implemented as outlined in H.R 25/ S.296) would enhance our competitiveness by eliminating the corporate income tax and by eliminating the embedded costs of payroll-related taxes. But the NRST doesn't make any arbitrary distinctions between internally-produced products and externally-produced ones, so it should be more popular with those who favor free trade.
One other difference: The NRST handles the problem of regressivity by providing a "prebate" to all citizens. By doing this, it avoids the need to exclude various types of purchases/goods--it effectively removes all taxation from purchases up to the poverty level. The VAT typically handles the regressivity problem by excluding various types of goods. This turns into a very complicated issues. This article provides a glimpse at things in Britain.
In part:
And so, in the United Kingdom, according to the regulations of Her Majesty's Inland Revenue Service, crackers made from tapioca starch carry no tax; prawn crackers made from cereals do. Frozen yogurt that needs to be thawed before eating is zero rated, frozen yogurt bears the tax. Get it? If you don't, too bad—Her Majesty's tax collectors are not in the habit of offering an explanation for their regulations.
Food for animals creates other problems. If it is "suitable for all breeds" it is taxed, but if "it is held out for sale exclusively for working dogs" it is not, unless, of course, "it is biscuit or meal," in which case it is taxed.
So dog food for "sheepdog breeds" is taxed, but dog food for "working sheep dogs of any breed" is not; food for greyhounds is taxed, food for "racing greyhounds" is not. This may be the only tax in Britain that favors work over leisure.