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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Tommaso who wrote (51199)6/22/2004 4:41:54 PM
From: energyplay  Read Replies (2) of 74559
 
One major negative effect of VAT - it can be a tax on efficency. If your electric plant uses 7 MCF to produce a Kilowatt hour, and my plant uses 9 MCF to produce a Kilowatt, you get to pay more tax than me.

VAT will also tend to hit intellectual property & capital intensive businesses harder relative to an income tax.

Software, drugs, medical devices, semiconductors all have high gross margins which get hit by VAT.

Do we really want to tax these industries more than retailing ?
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