Reforming value added tax |
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| Authors: | Graham Bannock |
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| Institution: | Graham Bannock is Chairman of Bannock Consulting Ltd. This paper was originally commissioned by the UK Federation of Small Businesses (FSB) and completed in April 2000. I wish to acknowledge help and suggestions from the FSB and officials of HM Customs &Excise and the European Commission in preparing this paper. The views expressed are those of the author and do not necessarily reflect those of the Federation, particularly on the way forward. The author gratefully acknowledges the permission of the FSB to publish the paper here. |
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| Abstract: | The research reviewed in this paper establishes that the VAT system generates heavy administrative burdens for small firms in Europe despite various measures taken to alleviate them. A possible solution would be to abolish VAT charges between registered traders which would, in effect, convert the tax into a sales tax. The conclusion is that such a change would necessitate modification of the 6th Directive on VAT. The other alternative might be to compensate small firms for their work as unpaid tax collectors. |
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