Regular readers know I’m not a fan of the Organization for Economic Cooperation and Development. Heck, just take a look at some of the examples in this post and you’ll understand why.
Well, the Secretary-General of the Paris-based bureaucracy just pontificated about the value-added tax. Let’s see whether my knee-jerk hostility is warranted.
Here is the basic hypothesis from the OECD’s head bureaucrat.
Our VAT policies are important tools to foster growth and employment, but also to build stronger, cleaner and fairer economies.
That’s a bold sentence, so let’s dissect it. Starting with the last part, I’m not sure what he means by “cleaner,” so let’s set that aside. I assume “fairer” is a code word for class warfare, though it doesn’t make sense in this context since a VAT – for all its other flaws – is a proportional levy.
So what does he mean by “foster growth and employment” and making an economy “stronger”? Does that mean the OECD is recommending big reductions in VAT rates? That would make sense since the VAT is similar to the income tax in that it drives a wedge between pre-tax income and post-tax consumption.
But you have to remember we’re dealing with the OECD, and on policy matters the Paris-based bureaucracy inevitably supports statism. So you won’t be surprised to learn that the OECD thinks higher VAT rates are good for growth! I’m not joking. Let’s look at what the Secretary-General of the OECD said.
VAT policies are playing a strategic role in our recovery efforts, but they could do more. Many countries are seeking to raise additional revenues from VAT as part of their fiscal consolidation strategies. Between 2009 and 2012, sixteen OECD countries increased their VAT rates. Six more increased their VAT rates. This is reflected in the OECD average standard VAT rate that has risen from 17.7% in 2008 to 19% today. This is quite remarkable considering that the OECD average had remained stable for over ten years before 2008. Raising the standard rate is the easiest way to increase revenue. …Another option for governments is to consider broadening the tax base, such that goods and services that are now exempt or subject to reduced rates would gradually be taxed at the standard rate.
In other words, he’s bragging that the VAT is easy to raise and he’s happy that the average VAT rate has jumped significantly.
But what’s really amazing is that he claims this is pro-growth, part of “our recovery efforts.” So the OECD is just as clueless as the Congressional Budget Office and is embracing the view that higher tax burdens are good for the economy.
This is par for the course for the OECD, as you can see from this video.
Something to keep in mind for lawmakers who are looking for an easy way to save $100 million without taking away any goodies from American voters.
[…] on a wide range of issues, including class-warfare taxation, energy taxation, business taxation, value-added taxes, Keynesian spending, green energy, and government-run […]
[…] It also galls me that the bureaucracy reflexively embraces just about every kind of tax hike, including class-warfare taxes on income, big new energy taxes, business taxes, and money-vacuuming value-added taxes. […]
[…] OECD advocates the value-added tax based on the absurd notion that increasing the burden of government is good for growth and […]
[…] OECD advocates the value-added tax based on the absurd notion that increasing the burden of government is good for growth and […]
[…] OECD advocates the value-added tax based on the absurd notion that increasing the burden of government is good for growth and […]
[…] OECD advocates the value-added tax based on the absurd notion that increasing the burden of government is good for growth and […]
[…] And the bureaucrats reflexively advocate higher value-added tax burdens. […]
[…] And the bureaucrats reflexively advocate higher value-added tax burdens. […]
[…] OECD advocates the value-added tax based on the absurd notion that increasing the burden of government is good for growth and […]
[…] OECD advocates the value-added tax based on the absurd notion that increasing the burden of government is good for growth and […]
[…] OECD advocates the value-added tax based on the absurd notion that increasing the burden of government is good for growth and […]
[…] OECD advocates the value-added tax based on the absurd notion that increasing the burden of government is good for growth and […]
[…] But, to be fair, the OECD wants higher taxes for everybody – including more Obama-style class-warfare taxes in America. The bureaucrats even argue that VATs are good for growth and job creation! […]
[…] You probably won’t be surprised to learn that the crazy bureaucrats at the Paris-based OECD think the VAT is good for growth and jobs. Sort of makes you wonder why we’re subsidizing those statists with American tax […]
I would note that Canada, an OECD country has lowered its VAT rate from an initial 7% at GST implementation in 1991 to 5% today in 2013. Perhaps Canada is an outlier here, but Canada also happens to be the OECD country that most closely resembles the US economy.
[…] P.S. I don’t know if you’ll want to laugh or cry, but the tax-free bureaucrats at the Organization for Economic Cooperation and Development actually argue that the VAT is good for jobs and growth. […]
[…] P.S. I don’t know if you’ll want to laugh or cry, but the tax-free bureaucrats at the Organization for Economic Cooperation and Development actually argue that the VAT is good for jobs and growth. […]
[…] shown no reluctance to raises taxes. I’ve already discussed their unfortunate propensity to hike value-added tax rates. Alan explains that they’re doing the same thing for income tax […]
[…] particularly nauseated by the OECD’s support for value-added taxes and their ridiculous assertion that poverty is higher in America than Greece or […]
[…] You probably won’t be surprised to learn that the crazy bureaucrats at the Paris-based OECD think the VAT is good for growth and jobs. Sort of makes you wonder why we’re subsidizing those statists with American tax […]
One hundred million for all this redistribution propaganda with the stamp of approval of an enlightened eloquent multicultural international elite? That is a bargain. Just think how much taxpayer money Obama would have to spend to generate a HopNChange message with equal intellectual weight.
As our friend John Lennon would say, “Imagine all the pe-pole working for the state (and the limousines of their enlighten OECD guardians of pan-French happiness) – you may say I’m a dreamer but were more than fifty percent…”.
Let’s see how’s my French accent:
“Vud you lik sir anither fine pis of taxpier fininced Camembert vit yor pâté sir? Zis particulier pis is bwought to vu from de income of a Suth Dakotà farmer. Vu no thos hommes vulgaires vit de dirt under thir fingernails. Zat is all his writched little VAT could bie you for your mity contrubutión to enlitemént propagandà sir”.
“Zat vrethched Suth Dakotà farmèr! Ve must tak him out of his two acre hous and his vi eit truk ind put him in a forty square meter Paris appartmènt to driv ze smart car – ve vill even put some fine pis of art,… a gargoyle perhaps… on his balconý, to civilizé dis brut ”.
When faced with this pan-world Francification even the Taliban start looking like a welcome breakaway movement.
Can’t we just all get along together? If that is the OECD dream, then thanks heavens we can’t.
If higher taxes are so great for “growth and employment,” why do OECD employees get tax-free salaries? Doesn’t this mean the OECD is a tax haven?