Possible tax would force cutbacks in consumer spending
August 27, 2010
Filed under Features
In an effort to reduce the federal deficit some policymakers are proposing a new Value Added Tax , but consumers say it would force them to cut back on spending, according to a survey conducted for the National Retail Federation (NRF) by BIGresearch.
Nearly two-thirds of those surveyed – 64 percent – said the proposed tax of any amount would impact their spending. If the government imposed a tax of 15 percent and applied it to all purchases, 92 percent said their spending would be affected.
“These numbers are clear evidence of what common sense would tell even the most casual observer: If you tax spending at a time when the economy is still struggling to recover, consumers are going to spend less,” NRF President and CEO Matthew Shay said in the press release. “With consumer spending representing two-thirds of the economy, a consumption tax is not the path to recovery or a prudent way to address the federal deficit.”
A number of prominent members of Congress and policymakers have said in recent months that a tax should at least be considered as a way to reduce the federal deficit, which is currently at its highest share of GDP since World War II.
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