Why is the VAT administratively superior to a retail sales tax? Q.Why is the VAT administratively superior to a retail sales tax? A.Retail sales taxes suffer from several enforcement problems. Most notably, the government has no record of transactions with which to verify retailers’ tax payments. In a value-added tax, the chain of crediting creates a natural audit trail, and the seller has more incentive to report the transaction and pay tax. Read more about Why is the VAT administratively superior to a retail sales tax?
What transition rules would be needed for a national retail sales tax? Q.What transition rules would be needed for a national retail sales tax? A.The answer depends more on politics than economics. Read more about What transition rules would be needed for a national retail sales tax?
What would the tax rate be under a VAT? Q.What would the tax rate be under a VAT? A.The rate of a value-added tax depends on how much revenue it is intended to raise and how broad the VAT base is. The lower the revenue target and the broader the base, the lower the tax rate will be. Read more about What would the tax rate be under a VAT?
