International -- Readers Report
NEW ZEALAND ALREADY RELIES ON A HEFTY SALES TAX (int'l edition)
In "Ready for a 23% sales tax?" (American News, Dec. 29/Jan. 5), a statement is made that "it is unrealistic to expect the U.S. to adopt a tax system that no other nation has ever tried." Clearly, the writer has no knowledge of New Zealand's 12.5% sales tax on all goods and services (GST). Exempt from the tax are secondhand houses, the private sale of used cars, sale of company shares, the sale of a business, and banking/mortgage/loan transactions--although GST is applied to fees and services attached to the above exemptions. The party selling the goods and services collects the GST and pays to the Inland Revenue Service.
New Zealand has had such a tax for 10 years or so, and it works simply and catches most people one way or another. In New Zealand, tax on income, after adjustment for expenses, applies at a maximum rate of 33%. A sales tax of, say, 20% to 25% would be preferable to income tax and less costly to collect and monitor than an income-based system. But, of course, a sales tax would mean a dramatic reduction in work for professional accountancy firms.