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What items will be exempt from the VAT? Will there be...?

And just to add to the a VAT's inherent complexity: since it's a Value Added tax, what about the shipping leg(s)--will transport get taxed along the production and sales chain? On every leg, or just whenever transport mode changes? Since the transport will be interstate, each state will draw off a taste, too, in varying amounts. And what about the portion of the chain that occurs in foreign countries: will we get tax credits for taxes paid in those jurisdictions? Or just price increases to cover the taxes the producers/sellers are paying to those foreign jurisdictions? On top of the price increases the producers/sellers already are charging to cover the domestic taxes paid at every step.

VATs, as Peter has indicated, will very quickly become even more Byzantine, and vulnerable to cheating, than an income tax.

Eric Hines
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