Daniel J. Mitchell
Recommend this article

The value-added tax is a pernicious levy.

It’s basically a hidden form of national sales tax, imposed every time a transaction occurs at any stage of the production process.

But what irks me about the VAT is not its design (indeed, it shares some key characteristics with the flat tax). What gets me agitated about the VAT is the fact that politicians always seem to treat the tax as a way of financing a larger burden of government spending.

That’s certainly what we’ve seen in Europe, both when the VAT was first implemented beginning about 45 years ago and more recently when many nations increased the rate to finance bailouts and faux Keynesian stimulus.

With this background, you’ll understand why I get excited whenever I see signs of anti-VAT fervor. Even in tiny and largely unknown British colonies such as the Turks and Caicos Islands.

Here are some excerpts from Tax-News.com.

On February 1, 2013, at a lengthy House of Assembly session, the newly elected Government backed a bill proposed by the opposition to block the introduction of the 11% VAT from April. TCI VAT Mutiny16 members backed the measure, with just 2 in favor of proceeding with the implementation of VAT. Since the announcement that VAT would be introduced, Turks and Caicos citizens and business groups have vehemently contended that VAT is inappropriate for the islands and is being “forced through” by the interim Government, at the behest of UK authorities.

Not surprisingly, given the pervasive statism in London (where the VAT rate was recently boosted to 20 percent), the U.K. government is on the wrong side of the issue, demanding that the VAT be imposed.

Recommend this article

Daniel J. Mitchell

Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute.