Oct 14, 2010

Retail group’s analysis paints dire image of a value-added taxBy Lori MontgomeryWashingtonPost.com

Piling a European-style sales tax on top of the existing U.S. tax structure would immediately destroy 850,000 jobs and damage retail spending for years to come, according to an economic analysis commissioned by the National Retail Federation, a leading trade group.

The report studied the potential effect of a 10.3 percent value-added tax, or VAT, a form of sales tax applied at every stage of production. The tax is ubiquitous around the world, having been adopted in more than 130 countries.

NRF president Matthew Shay said the study is intended to push back against what he views as a rising tide of interest in the VAT in Washington, where policymakers are eager to reduce record budget deficits.

“Supporters claim a VAT is the solution to the nation’s economic ills, but nothing could be further from the truth,” said Shay, who represents an industry that has long opposed a value-added tax. “This report has found that a VAT would have negative economic consequences for most working Americans alive today.”

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