I want to talk about the time it will take to implement a VAT. This is why it needs to be implemented well in advance of a financial crisis, perhaps initially as a revenue-neutral tax reform. If those who believe, as I do, that we will ultimately need a VAT to help close the fiscal gap, waiting until we have a gun to our collective heads to do so will be much too late.
The reason is that in a financial crisis the greatest premium will be placed on spending cuts and revenue increases that can be implemented very quickly–in the current or next fiscal year or two. That is because markets and politicians will want to see fast action and try to get the crisis behind them as soon as possible. This will tend to put off the table entitlements, big cuts in which (such as raising the retirement age) need to be phased in over many years, and new revenue sources. In the short run, higher revenues will have to come primarily from the income tax and from raising rates unless there is a VAT already place.
I have in my possession a May 1993 study by the Internal Revenue Service titled, „A Study of Administrative Issues in Implementing a Federal Value Added Tax.” It was produced by the assistant commissioner for planning and research and goes into great detail about what the agency would need in terms of time, money and manpower to start collecting VAT revenues. The bottom line is that it would take at least two years.
I have tried to think of a way this two year gap could be bridged in the event of a financial crisis. One possibility would be a temporary national retail sales tax from which revenue could be raised more quickly than through a VAT because almost every state already has a sales tax. For reasons I have explained in detail in criticizing the so-called FairTax, this would not work as a replacement for the federal tax system. But as a way of raising bridge financing while a VAT is being implemented it might work. I believe that Australia did something like this a few years ago.
W styczniu 2020 roku Wielka Brytania formalnie opuściła Unię Europejską. Oczekiwane korzyści z brexitu, poza odzyskaniem suwerenności w zakresie kształtowania prawa i zewnętrznych relacji gospodarczych, jednak się nie zmaterializowały. Widoczny jest natomiast spadek wydajności i konkurencyjności brytyjskiej gospodarki, co wpływa także na kondycję rynku pracy.
