Re: (OPE-L) another bit about taxation

From: Anders Ekeland (anders.ekeland@ONLINE.NO)
Date: Fri Jun 04 2004 - 02:59:57 EDT

At 17:21 02.06.2004, you wrote:

>How would turnover tax differ from value added tax?

Primarily by its simplicity.

1) In the Norwegian VAT system, you keep books on VAT paid, on VAT charged,
then there is the clearing of the two amounts, eventual reimbursement from
the state - etc. In the old days this was quite a bit of paperwork. In the
age of computers - of course much less. But there is still large control
system to check that you do not cheat with the clearing.

2) That the tax base is not general - and that rates differ. To have the
same base and one rate could of course be implemented for a VAT too, so
this is more a historical relict. One of the reasons for my question was
that the left-center in Norway was able to get a system of less tax on
foodstuffs. The general rate is 24% and 12% on groceries (not sweets etc).
But what happened was that there was almost no drop in prices - people were
used to the prices and the capitalist cashed in the difference! On the
other hand - if you now buy a take-away (pizza, coffee ...) is has 12% - if
you eat the pizza and drink the coffee creating quite a bit of creativity -
and the need for a control apparatus... That aspect of the progressive
lowering of indirect tax on groceries just irritated people.

There are a lot of other examples of the problems that not all items have
VAT. The daily papers do not, but the tabloid glossy magazines have, but
what is the borderline between a paper and a magazine? Our biggest populist
glossy magazine started coming out twice a week to avoid VAT?

Another issue that irritates people here up north is the dramatic
difference in taxation on ordinary cars for person traffic and the type of
cars used by craftsmen (painters, plumbers, sales agents etc.) This also
creates a lot of creativity - and endless changes in regulations - and
endless creative innovations by the car retailers "optimizing" the weight,
numbers of seats, the walls inside the car, the volume of the storage ares
etc. There is a complicated set of rules of how much to pay to register a
craft-vehicle to a person-vehicle etc. This hinders a rational use of
peoples cars since today you can take out seats, walls etc. in no time.

Again it is just as much the complicated system - as the level of taxes
that is the political problem for the left.

- So getting away with the keeping of two accounts, the
clearing/periodisation of the VAT would be the main difference - much less
controll needed.

I think a turnover tax would stimulate vertical intergration, but this
simplicity is the most important aspect.

Anders Ekeland

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