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>earlier this year suggested Japan’s sales tax needed to rise to as much as 26% to pay for bulging social security costs Wouldn't that absolutely crater consum

>earlier this year suggested Japan’s sales tax needed to rise to as much as 26% to pay for bulging social security costs Wouldn't that absolutely crater consumer spending? I know if I had to pay 26% sales tax suddenly everything I buy would be from China and ship labeled "personal gift".

FDSGSG 7y ago
Why would the customs not collect sales tax on gifts? They certainly do in the EU.
timwaagh 7y ago
A lot of economists consider sales tax to be the best way to tax. The reason is it doesn't hinder savings and investments
- Radle 7y ago
  "The reason is it doesn't hinder savings and investments" -Said no low income earner ever. Sales taxes are regressive taxes. It's stealing out of the pockets of people who are too poor to find time for politics or who are too uneducated to understand that they are being mugged. If I was an economist with a college degree, I would also support sales tax.
  - mikemotherwell 7y ago
    Tax is undeniably complicated, and I have no firm opinion what is better, and I'm often shocked when people do. The regressive nature of a sales tax is bad, but then, income tax is so easy to avoid. We all need things, making sales tax almost unavoidable, and what's the point of being rich if you can't spend it? The problem with income tax is that it encourages the richest to run scams where the ROI is "cost of accountant + tax saved < expected tax = do it". If your income exceeds $100,000, it is almost guaranteed to be worth it to hire expensive lawyers. Then there are the terrible scams like the one I read (which I can't confirm) where startup founders with public companies receive a minimal income, like $1 per year, and instead borrow their yearly requirements against the value of their shares. That could be $10M tax free - it is borrowing so it isn't income - and a sales tax starts to look like a pretty good idea! That'd be $1M in tax on a sales tax of 10%, vs $0. Anyway, like I said, tax is complicated!
    - dragonwriter 7y ago
      > We all need things, making sales tax almost unavoidable Sales tax is easy to avoid, especially for the rich: buy things outside of the taxing jurisdiction.
  - Causality1 7y ago
    Indeed. If I buy a gun or a car or a TV I pay sales tax. If I sell it I have to collect sales tax and then pay income tax on the sale despite buying it with money that was already taxed once. If I buy stocks I pay no tax at all unless I manage to sell them at a profit, which is insane. Treat stocks like any other property: collect sales tax on the purchase and then income tax on the gross revenue after selling them regardless of whether you made a profit.
- dragonwriter 7y ago
  > A lot of economists consider sales tax to be the best way to tax “Best” is always specific to a value system. An economist who pretends “best” is an objective question has confused their subjective value system with universal truth. > The reason is it doesn't hinder savings and investments That's only true if you only consider first-order effects, just like saying taxes on corporate income are best because they don't effect consumers ability to afford goods and services would be. Consumption taxes negatively impact investment returns (and thereby also the incentive to invest) by depressing quantity traded of consumer goods at any price level.
the-dude 7y ago
NL is at 21% and there are other countries in the EU which are around 25%. Personally I think it is crazy.
- hocuspocus 7y ago
  High VAT is probably the only EU-wide taxation scheme that works well. All other taxes can be avoided in a way or another, thanks to the lack of tax harmonization. Corporate tax itself is subject to systematic avoidance from big companies thanks to countries like Ireland, Netherlands and Luxembourg. That is crazy.
- walterstucco 7y ago
  It is not.
- RA_Fisher 7y ago
  Yikes! Talk about theft of labor. A 25% sales tax means one in four consumptive dollars is taken away. Ouch.
  - rakoo 7y ago
    Taxes go to the State, which ultimately goes back to you and to those in needs. It's not a theft, it's a shared account for the common good. Moreover it's a tax on consumption, not on production. High taxation is what makes something like Healthcare so good and eventually cheap for everyone, contrary to the disastrous situation in the US. As a French I'm more than happy to pay 20% VAT if I know it's going to benefit everyone.
    - the-dude 7y ago
      VAT = Value Added Tax Sounds like a tax on production to me.
      - alias_neo 7y ago
        It's a tax on "luxuries" as I understand it. I'm just not sure yet how putting food on your table is supposed to be a luxury. The hard part is that in theory, healthier, "natural" food (e.g. fresh fruit and vegetable) should not have VAT, but it's just more expensive anyway than cheap processed food that's had "value added" by the process.
maccard 7y ago
Most goods in the UK and Ireland are taxed at 20% at point of sale, we seem to function ok.
- alias_neo 7y ago
  It's built into the cost, and has been for a long time. It was 15% before its most recent increase. The thing about it is, because it has been there for so long our economy has adjusted to it. It's completely different to up tax from say 10% to 20% in one fell swoop as it puts a huge burden on anybody not wealthy. I guess the issue is not so much the rate of tax, but the rate at which it is increased. Wages and living costs need to even out.
Svip 7y ago
Customs is cracking down hard on Chinese shipments. Often ignoring the "personal gift" label, because a majority are not. Sweden has introduced an extra import tax on Chinese shipments.[0] In Sweden, they pay 25% VAT, with some reduced rates. In Denmark, it's 25% with no reduced rates. Although used items are VAT free. And speaking as a Dane, I honestly don't have a problem with it. Even though I have to send invoices from time to time, and charge a 25% VAT. [0] https://tamebay.com/2018/01/new-import-tax-for-chinese-goods-entering-sweden.html https://tamebay.com/2018/01/new-import-tax-for-chinese-goods...
- issati 7y ago
  It isn't an extra import tax, just enforcement of VAT that was always a requirement (and always happened if you used a courier like UPS or DHL rather than the post office). Some countries have minimums however, but that will be removed in the EU in the future.

FDSGSG 7y ago

Why would the customs not collect sales tax on gifts? They certainly do in the EU.

timwaagh 7y ago

A lot of economists consider sales tax to be the best way to tax. The reason is it doesn't hinder savings and investments

Radle 7y ago
"The reason is it doesn't hinder savings and investments" -Said no low income earner ever. Sales taxes are regressive taxes. It's stealing out of the pockets of people who are too poor to find time for politics or who are too uneducated to understand that they are being mugged. If I was an economist with a college degree, I would also support sales tax.
- mikemotherwell 7y ago
  Tax is undeniably complicated, and I have no firm opinion what is better, and I'm often shocked when people do. The regressive nature of a sales tax is bad, but then, income tax is so easy to avoid. We all need things, making sales tax almost unavoidable, and what's the point of being rich if you can't spend it? The problem with income tax is that it encourages the richest to run scams where the ROI is "cost of accountant + tax saved < expected tax = do it". If your income exceeds $100,000, it is almost guaranteed to be worth it to hire expensive lawyers. Then there are the terrible scams like the one I read (which I can't confirm) where startup founders with public companies receive a minimal income, like $1 per year, and instead borrow their yearly requirements against the value of their shares. That could be $10M tax free - it is borrowing so it isn't income - and a sales tax starts to look like a pretty good idea! That'd be $1M in tax on a sales tax of 10%, vs $0. Anyway, like I said, tax is complicated!
  - dragonwriter 7y ago
    > We all need things, making sales tax almost unavoidable Sales tax is easy to avoid, especially for the rich: buy things outside of the taxing jurisdiction.
- Causality1 7y ago
  Indeed. If I buy a gun or a car or a TV I pay sales tax. If I sell it I have to collect sales tax and then pay income tax on the sale despite buying it with money that was already taxed once. If I buy stocks I pay no tax at all unless I manage to sell them at a profit, which is insane. Treat stocks like any other property: collect sales tax on the purchase and then income tax on the gross revenue after selling them regardless of whether you made a profit.
dragonwriter 7y ago
> A lot of economists consider sales tax to be the best way to tax “Best” is always specific to a value system. An economist who pretends “best” is an objective question has confused their subjective value system with universal truth. > The reason is it doesn't hinder savings and investments That's only true if you only consider first-order effects, just like saying taxes on corporate income are best because they don't effect consumers ability to afford goods and services would be. Consumption taxes negatively impact investment returns (and thereby also the incentive to invest) by depressing quantity traded of consumer goods at any price level.

the-dude 7y ago

NL is at 21% and there are other countries in the EU which are around 25%. Personally I think it is crazy.

hocuspocus 7y ago
High VAT is probably the only EU-wide taxation scheme that works well. All other taxes can be avoided in a way or another, thanks to the lack of tax harmonization. Corporate tax itself is subject to systematic avoidance from big companies thanks to countries like Ireland, Netherlands and Luxembourg. That is crazy.
walterstucco 7y ago
It is not.
RA_Fisher 7y ago
Yikes! Talk about theft of labor. A 25% sales tax means one in four consumptive dollars is taken away. Ouch.
- rakoo 7y ago
  Taxes go to the State, which ultimately goes back to you and to those in needs. It's not a theft, it's a shared account for the common good. Moreover it's a tax on consumption, not on production. High taxation is what makes something like Healthcare so good and eventually cheap for everyone, contrary to the disastrous situation in the US. As a French I'm more than happy to pay 20% VAT if I know it's going to benefit everyone.
  - the-dude 7y ago
    VAT = Value Added Tax Sounds like a tax on production to me.
    - alias_neo 7y ago
      It's a tax on "luxuries" as I understand it. I'm just not sure yet how putting food on your table is supposed to be a luxury. The hard part is that in theory, healthier, "natural" food (e.g. fresh fruit and vegetable) should not have VAT, but it's just more expensive anyway than cheap processed food that's had "value added" by the process.

maccard 7y ago

Most goods in the UK and Ireland are taxed at 20% at point of sale, we seem to function ok.

alias_neo 7y ago
It's built into the cost, and has been for a long time. It was 15% before its most recent increase. The thing about it is, because it has been there for so long our economy has adjusted to it. It's completely different to up tax from say 10% to 20% in one fell swoop as it puts a huge burden on anybody not wealthy. I guess the issue is not so much the rate of tax, but the rate at which it is increased. Wages and living costs need to even out.

Svip 7y ago

Customs is cracking down hard on Chinese shipments. Often ignoring the "personal gift" label, because a majority are not. Sweden has introduced an extra import tax on Chinese shipments.[0] In Sweden, they pay 25% VAT, with some reduced rates. In Denmark, it's 25% with no reduced rates. Although used items are VAT free. And speaking as a Dane, I honestly don't have a problem with it. Even though I have to send invoices from time to time, and charge a 25% VAT. [0] https://tamebay.com/2018/01/new-import-tax-for-chinese-goods-entering-sweden.html https://tamebay.com/2018/01/new-import-tax-for-chinese-goods...

issati 7y ago
It isn't an extra import tax, just enforcement of VAT that was always a requirement (and always happened if you used a courier like UPS or DHL rather than the post office). Some countries have minimums however, but that will be removed in the EU in the future.