Living Off The VAT Of The Land

by DavalosMcCormack on March 4, 2010

The budget deficit is soaring, we are trillions in debt and the economy is in a shambles, so how are we going to dig ourselves out of this hole? One idea being bandied around is introducing something called VAT. It stands for Value Added Tax but having grown up with it in England I can think of several other names it was called, none of which I am able to repeat in polite society. What does this have to do with health.. don’t worry, I’ll get to that.

VAT is simple; essentially it’s a national sales tax. It’s also popular, used in some 130 countries around the globe. You slap an extra few percent on the cost of every good sold – from 5 percent in Japan to 25 percent in some Scandinavian countries – and pretty soon you are raking in some serious money.

How serious? According to Ezekiel Emanuel, brother of White House Chief of Staff Rahm, and the author of ‘Health Care, Guaranteed‘,a 10 percent VAT in the U.S. would allow every American not entitled to Medicare or Medicaid, to enroll in a health plan with no deductible and very low co-payments.

However, one of the problems with something like VAT is that it’s a regressive tax in that it hurts the poor the most. Think about it. If you have little money and spend most of it on basics like food, then if the cost of that food goes up 5 or 10 or 20 percent, you are screwed. If you are rich, it’s an inconvenience. If you are poor. It’s a tragedy.

So, if you are going to introduce something like VAT you need to balance it out by cutting, slashing really, income taxes on folks earning less than, say $70,000 a year.

But when I was reading about this it gave me an idea on how we can cut the deficit, not screw poor people, but also help fight obesity and poor health habits at the same time. It’s pretty simple stuff really. Slap VAT on most goods, but not on fresh produce. So, that means fruits, veg, meat, fish all still remain the same price, but all the other stuff that so many people buy, canned and frozen foods, heavily processed and packed foods, frozen pizza and Hungry Hombre TV dinners – they all get hit hard.

By doing that you not only raise money, you also encourage people to switch away from all the stuff that is bad for them and has no nutritional value, and towards food that is healthy and rich in nutrients.

The hope would be that doing that would encourage people to eat better foods by providing a financial incentive. And as you do that you also add a hefty financial incentive for all of us not to buy stuff we really don’t need. And we also raise enough money to start cutting down that deficit.

Tempting proposition eh. There’s just one problem. No politician is likely to go for the idea. If you thought the Tea Baggers were crazy beforehand, just wait and see how mad they get when you slap an extra ten percent on the cost of their tea bags.

And as if that wasn’t bad enough. VAT was dreamed up by the Germans and perfected by the French. How screwed up is that?

Still, a chap can dream can’t he!

{ 1 comment… read it below or add one }

Steven Reidbord MD March 11, 2010 at 10:53 am

I share the sentiment, but another problem is that processed foods are disproportionately eaten by the poor. So picking on frozen pizzas and TV dinners is indirectly picking on the poor, and would be seen as elitist. Perhaps in conjunction with a tax break for lower income folk it could work… but I wouldn’t hold my breath.


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