Kill the VAT ! It is an unreasonable tax!!!
You want VAT as tax. Only better ones are retail sales tax, very low tariffs* and headpoll. If payment is mandatory, use fee are the best option.
Use fee example is getting a passport. You pay for a service which state must provide.
What most don't get is that tax base is more important that tax rate. Ie, what exactly is taxed is more important that what percentage is taxed. Since VAT has very broad base (all final consumption), it's rate can be low. Tax Foundation study of Britain in 2020 basically tells that correcting mistakes in VAT would enable elimination of 6 other taxes.
Yes, VAT is very powerful and enables raising of massive amount of taxes. With free spending politicians, well, rates can't be low (like max 10%).
Base of VAT and retail sales tax** is all final consumption which means it doesn't tax savings and investment as income taxes do. And since all economic theories*** says investment is key to growth, taxing investment is cutting of better future.
Now, taxing consumption means reducing life standard, but it doesn't stop getting better standard in future. Unless you start taxing investment.
Now, income tax can be turned into consumption based tax by not taxing dividends and capital gains.****.Horewer, dividens and capital gains are, actually, double taxed because, business must be profitable to be able to pay dividends and increase it's value (for capital gains tax). And positive profitability is taxed which means that for dollar to reach investor, that dollar will haircutted by tax agency twice.
And since corporate income tax is tax on imvestments, well, investments will be double taxed, so forget better future. Hopefully, you will avoid both estate and inheritance so that dollar doesn't get hit four times.
So, of state has VAT, correct procedure is to eliminate all deductions/carveouts.... in VAT and eliminate, first corporate income tax, then personal income tax.
For you Americans, turn personal income tax into consumption base tax. Eliminate deductions and remove from tax base all investment based income, then get rid of corporate income tax.
*Due to better privacy than usual sales tax
**Retail sales tax are economically same. So they can be swapped easily with each other assuming usage of correct base. Retail sales tax does have advantage of easier administration.
***That includes Marxist
****Not certain what about rest of capital income like earnings from renting, but I think anytime money is used to earn money shouldn't be taxed
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